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sr-102610-8bCity Council Meeting: October 26, 2010 Agenda Item: 8B To: Mayor and City Council From: Barbara Stinchfield, Community and Cultural Services Director Subject: Commercial Event Policy for Use of the 1550 Beach Parking Lot Recommended Action Staff recommends that the Gity Council approve revisions to the commercial event policy guidelines for events at the beach parking lot at 1550 Pacific Coast Highway (PCH). (Attachment A) Executive Summary Girque du Soleil (CDS) returned to the 1550 PCH beach parking lot in September 2009 under the current commercial event policy. At the time the City Council approved the CDS license agreement, staff was directed to prepare an economic impact analysis to understand the extent and nature of its impacts on the City as a whole, and on the Santa Monica Pier businesses, in particular, and to determine if changes to the current policy were warranted for events generally. The consulting team led by AECOM with Lauren Schlau Consulting completed the study. The study included a survey of CDS patrons and Pier visitors and analysis of five years of actual Pier sales data in order to answer the question of how businesses would have been expected to perform during the months of September through December 2009 if CDS had not occupied the lot. The study concluded that the net overall economic impact to the City was $16.7million and the total direct fiscal impact to the Gity was $1.1 million. It further concluded that CDS generated an additional $420,000 in sales for the Pier; however the impact on individual businesses was mixed. Entertainment businesses had a 1% reduction in sales while restaurants had a 9% increase in revenues, although there were differences within categories. While the economic impact study demonstrates clear economic gains to the City as a whole, the impacts to Pier businesses are more complex and highlight tensions surrounding commercial events. Staff has analyzed the AECOM study and, in several meetings, considered the concerns and recommendations of the PRC and Pier lessees. Based on the study and feedback from Pier stakeholders, staff recommends revisions to the commercial events policy that better balance the economic benefits of these events and the community's interest in additional cultural offerings with the Pier's concerns for adequate parking and preference for events that are most compatible with the operation of the beach and the Pier. The recommended changes shorten the commercial event window, which currently runs from Labor Day to Memorial Day, to January through mid- March for performance or timed commercial events, allows a longer period for untimed events (November through March), and restructures the event producer's fee for timed events to include a percentage of gross sales to better reflect a fair market rate for commercial use of the1550 lot. In addition, the changes would require more coordinated marketing and cross-promotion between event producer and Pier tenants, and enforce the limit on concessions or services in direct competition with Pier businesses. One further recommended revision would limit the window for single day large scale events from December 1 through January 1 during the daytime, and authorize the City Manager to negotiate and execute the license agreements for these daytime single day large scale events on an annual basis. Presently, single day large scale events could occur throughout the current window period, but require specific Council authorization for the license agreement. Background On September i 4, 2004, Council approved a policy to allow commercial events in the 1550 beach parking lot during the winter season. The intent of this policy was to generate substantial net revenue to the Beach Fund by licensing part of the parking lot for entertainment and cultural shows when parking demand is seasonally low. The guidelines specified among other things the maximum amount of space available for use, the maximum duration of events, and the fees required for such use. C?n September 15, 2005, Council approved revisions to the policy modifying the permissible time frame of events and the amount of space available for use. Additional policy revisions were approved by the Council an December 9. 2008 to allow greater flexibility in both the review process and the evaluation criteria and incorporated recommendations of the PRC (supplementai stafifi report). Council approved the inclusion of single day large scale events as part of the policy on September 22 2009. Single day large scale events exceed the maximum space permitted for events in the 1550 lot under the Community Events Ordinance. There have been several extended events approved under the revised policy, including Cirque du Soleil and the 2010 LA Marathon post-race festival. At the direction of the Council, The Economic /mpact of Cirque du So/ei/ on the City of Santa Monica was 2 prepared following the CDS visit last fall. This report summarizes the findings of the AECOM impact report {included as Attachment B}, highlights the concerns and issues raised by a number of Pier lessees and the Pier Restoration Corporation, and provides recommendations for further policy revisions to better balance the benefits and challenges of permitting commercial events in the 1550 beach parking lot. Discussion The purpose of allowing commercial events in the 1550 lot is three-fold. Commercial events: 1. Provide much needed revenue to the Beach Fund to support ongoing operations as well as capital improvements. 2. Meet the community's demand for increased cultural offerings, an articulated goal of the City's Creative Capital plan. 3. Provide economic benefits to the cultural tourism sectors of the community including hotels, restaurants, and retail, particularly those located on or adjacent to the Pier. Cirque du Soleil Economic Impact Report Cirque du Soleil submitted the first proposal under the revised commercial events policy. In accordance with the policy guidelines and as a result of extensive review by both the internal Commercial Events Committee, the Pier Restoration Corporation, and Pier lessees, a full range of conditions and mitigations were included in the License Agreement to respond to the challenges and complexity of CDS's return to Santa Monica.. These ranged from parking mitigations including the construction of 400 replacement parking spaces on the former Rand site for Pier and beach visitors and directing CDS patrons to offsite parking with free shuttle service, to direct marketing contributions and cross promotions with Pier tenants and the Convention and Visitors Bureau. A major concern expressed by Pier businesses was that in spite of these mitigation measures, the reduced parking in the 1550 lot would displace visitors and would have a negative financial impact on business during the three-month occupation. The City Council directed staff to prepare an economic impact analysis to examine the impacts and benefits of Cirque du Soleil. 3 Staff retained the consulting team of AECOM and Lauren Schlau Consulting (LSC) to analyze the net economic impact and fiscal benefits of the 2009 perfomance run. The analysis included 300 onsite surveys on the Santa Monica Pier during November and December of 2009 as well as an online survey of more than 1,200 CDS attendees. A key outcome of the survey was determining the magnitude of sales at the Pier and within Santa Monica that can be attributed to CDS visitors. AECOM also collected information on CDS local expenditures. One of the challenges in quant'rfying the impact of "lost revenues" is that there is no direct way to quantify the visitors that "did not come." AECOM collected actual sales information reported to the City of Santa Monica, using appropriate confidentiality protocols, over the past five years. This was used to establish a baseline performance threshold for Pier businesses that would answer the question of how businesses would have been expected to perform during the months of September through December 2009 if CDS had not occupied the lot. AECOM also met with Pier lessees individually and as a group to understand the qualitative impact on individual businesses. Key findings of the report include the following ® The overall net economic impact citywide was $16.7 million; the total direct fiscal impact to the City was $1.1 million. Of the $1.1 million, approximately $900,000 was direct revenue to the Beach Fund for license fee and beach parking, $16,000 to the General Fund for Civic Center parking, and $200,000 was tax increases to the General Fund. • CDS generated a net gain in sales to Pier businesses of $420,000, however, the impact on specrfic types of businesses differed. Entertainment businesses had a 1% reduction in revenues during this period, while restaurants had a 9% increase in revenues and impacts differed among categories. ® An estimated 156,000 visitors attended CDS; 40,000 also visited the Pier during their trip. ® CDS attracted a different market demographic to the Pier that was older, more affluent, and more local than the typical Pier visitor. • Although Pier businesses viewed parking as a significant issue, those surveyed did not indicate parking as a problem. Approximately half of CDS attendees parked in the Civic Center Structure or the 2030 lot as directed by the CDS website. 4 • A number of Pier businesses indicated that they did not believe they benefited from co-marketing. Proposed Policy Revisions The economic impact study demonstrates clear economic gains to the City as a whole from commercial events through spending by visitors in restaurants, hotels, shopping, parking and transportation, as well creating additional employment opportunities during the period of the event. The impacts to Pier businesses are more mixed and highlight tensions between the aforementioned purposes of commercial events. Staff has analyzed the AECOM study and considered the concerns and recommendations of the PRC and Pier lessees to develop revisions to the commercial events policy that would better balance the revenue needs of the Beach Fund and the community's interest in additional cultural offerings with the Pier's concerns for adequate parking and preference for events that are most compatible with the operation of the beach and the Pier. The recommended changes are: • Limit the period for performance or timed extended events to January through mid-March when Pier lessee sales would be the least impacted. • Allow untimed events during November through March • Allow single day large scale events during the daytime hours from December 1 through January~?'and authorize the City Manager to negotiate and execute these license agreements on an annual basis. • Restructure the licensee's fee to allow for negotiation of a percentage of gross sales as part of the fee structure for timed events • Require more coordinated marketing and cross promotion between event producer and Pier tenants. • Enforce the limit on concessions or services in direct competition with Pier businesses. defining the Off Peak Season and Duration of Events One of the key concerns raised by Pier tenants is the definition of the off peak season and whether weekends during winter months may actually be as high as weekdays during the summer. AECOM created a monthly revenue index based on five years of Pier sales data that presents the typical seasonality of revenues. June through August have the highest revenues with November through February having the lowest sales. In 5 order to address the question of weekend sales performance that was not included in the AEGOM report, City staff analyzed sales data for weekends for the past three years for November through March for those businesses that report sales on a daily basis to the City. About one third of Pier businesses report daily sales, representing all categories of Pier business. The chart below shows the percentage of median gross sales for the weekends in each month as compared to the gross sales for weekdays in July and August. Business Monthly Percenhage of Median Gross Salesfor Weekdays in July and August Notiember December January February March Business 1 49% 17% 31% 45% 48% Business 2 50% 33% 43% 48% 73% Business 3 61% 41% 81% 81% 13% Business 4 87% 62% 108% 108% 129% Business 5 58% 43% 62% 73% 106% Business 6 46% 32% 60% 47% 97% Based on gross sales analysis for Saturdays and Sundays from 2007-2009 (No~mber and December) and 2008 - 2010 (January -March) compared to weekday sales for July and August during 2008 - 2010 While there is variation among businesses, based on this level of activity during traditionally "non-peaK' months, staff recommends that the commercial event season be limited to January through mid-March for performance events and to November through March for exhibition, untimed events which have been shown to not negatively impact Pier sales. Pair Market 1laiue for 1550 Beach Parking Lot A key consideration given the impacts associated with events is ensuring that the fee charged for use of the 1550 lot reflects the market value for the space. The current fee structure is based on a square foot charge for the amount of space used plus a lump sum for the amount of parking revenue that would be lost during the occupation period. Based on research of similar venues, staff recommends that in addition to this base rental calculation, the City receive a percentage of gross sales for performance or timed events. Five percent of gross sales is an industry standard for rentals of entertainment venues such as theaters. 6 Single Day Large Scate Events The City has been host to single day large scale events such as the Rose Bowl pep rallies and the LA Marathon post-race festival which fell outside of the permitting parameters for Community Events, namely they exceeded the allowable space in the beach lot and/or came in under the 30 day application requirement, but are consistent with the objectives of the Commercial Events Policy and provide economic benefits to the cultural tourism sector of the community and to the Beach Fund through increased parking revenues. Staff recommends limiting these single day large scale events within daytime hours during the time period from December 1 through January 1. To facilitate the review and licensing process for daytime single day large scale events, which are often planned on short notice, staff recommends that the City Manager be authorized to negotiate and execute the license agreements for any daytime single day large scale events that occur in December through January 1 each year in accordance with the Council approved commercial event guidelines. The Community Events policy would remain unchanged and applicable to 1-3 day events that fall within the established permitting parameters. Pubttc Outreach As part of the review of the AECOM study, a draft report was sent to the PRC, Pier lessees, the CBV, Santa Monica Chamber of Commerce, and the Bayside District Corporation. The consultant team presented the findings of the report to a special meeting of the PRC on August 27, 2010. The PRC Operations Committee met on October 4, 2010 to consider the changes proposed by City staff. The Operations Committee voted to recommend approval of the proposed changes to the PRC Board. At its October 6, 2010 meeting, the PRC Board approved the proposed changes to the commercial events policy and expressed support for this approach, which recognizes 7 the distinction between timed and untimed events, and the growth in more year-round business on the Pier. /Next Steps Staff is preparing to issue a RFP for the 2011-12 commercial event season that will incorporate the proposed changes if approved by the Gity Council. Pursuant to the approved event guidelines, all proposals will be considered at the same time to foster a competitive bidding process. The RFP will include the requirement to remove the parking lot improvements in the former Rand site, which were installed by CDS in 2009. These improvements must be removed to allow for construction of Palisades Garden Walk to begin in spring 2012. All proposals will be evaluated according to the guidelines as revised in Attachment A. Alternatives. Council may elect to adhere to the existing guidelines, which retain a longer commercial event season and duration for events that would maximize flexibility for commercial events but would not address the concerns of Pier businesses and the surrounding neighborhood. Alternatively, Council may rescind the policy and prohibit the use of the 1550 lot for any commercial events resulting in a significant loss of revenue for the Beach Fund but address conflicting demands for the 1550 lot for Pier parking and beach visitors. Financial Impacts & Budget Actions Approval of the revised policy does not have any immediate financial impact and no budgetary actions are needed at this time. Specific rental terms would be negotiated with each approved event producer on the basis of event duration, size and any factors unique to the proposed event and would be included as Beach Fund Special Event revenue in future City budgets beginning in FY2011-12. All direct City staff time and 8 expenses would be reimbursed by the event producer to achieve full cost recovery to the Gity. Based on historical usage and current interest in performance or timed commercial events, there is no expected financial impact on the Beach Fund as a result of shortening the window for timed events. Prepared by: Judith Meister, Administrator Approved: Barbara Stinchfield Director, Department Forwarded to Council: ~-.,__ Rod Gould City Manager Attachment A: Proposed Revisions to Commercial Events Policy Guidelines Attachment B: economic impact of Cirque du Soleil on the City of Santa Monica 9 Procosed ~3evisions to E~,~^°°' Commercial Event Policy Guidelines Adopted by City Council on December 9, 2008; Revised on September 22, 2009 The City of Santa Monica will continue to use the 1550 Beach Parking Lot for ~~`~.''^-d-commercial events a*_ __"., .__:o-'o°o'p•o~:_"."=-_'c'~_ °.__:o~d, asa significant source of revenue to the Beach Fund and as a vital contributor to the City's Creotrve Capita/ plan. Event Season ~xaCd-a.+a, atisra Exhibitor untimed~;,Fe:,~_d events will be permitted during Novemeer through `ylarch .af-izc • Pe-fcrmane or aimed events will be germ Ced durinP is nuarv thrcu hmid-March. ..xlti,E~a;c=!dam-eve ,l=dGrino any e. _nE S_a~en .. _. . o Singl p=day large scale eventr will be permitted during day,+time hours in December ±hrouKh Januan; l !-,ems„--tom,. Pro[msatSubmission pnd Review Process • No extended event proposals will be accepted any later than six months prior to the proposer's event start date, with the exception of single day large scale events. All dates still not booked will be released. s Proposals for the event season beginning in September, 2010 will be due by September 1, 2009 and wiI I be reviewed atone time to foster a competitive bidding process. • Applications will be reviewed by a committee made up of City staff and representatives of other key groups such as the Pier Restoration Corporation (PRC) and the Santa Monica Convention and Visitors Bureau. Staff will meet with representative cf the Pier .'hestoration Corporation iPRC). the Pier Lessees Fomareed: Font: (Default)('alibn, 11 pt Assr~aticn the Santa Monaca Conventior aid Visitors Bureau znd Ba vde DstrLt Corporation and neighborhood representatives prior to recommenair.? final aporcval to the Gty Council. _ rl s ,_ .. _ , 4 __ a -The C.b fAa..a 2f IS autho'I ..d LO ne Oilate and EXELIITE iICErISE a reemE t5 fOr da~2lme ~inole day gar e scale everts d~r.~~ December th-ou~h lanuar 1 cn an annual basis • Licensing awards will be made based on the review guidelines outlined below. Policy Guidelines - To be eligible for review, the proposed event must be entertainment or cultural and offer a unique opportunity to the public. Eventr that have as a principal component merchandise sales or exhibits, business promotions, or product or service launches/sampling will not be considered. Eligible proposals will be evaluated based on the degree to which the event: • Offers a unique cultural or entertainment experience. Demonstrates clear measurable economic benefit to the City and local businesses, including Pier lessees. • Contaqins a rental fee that significantly contributes to the Ciiys Beach Fund. • Balances the amount of space allocated in the 15501ot with the duration of the event. s Addresses traffic and parking impacts th rough the provision of nearby replacement parking, parking shuttles, public transportation, event signage, or similar mitigations. • Addresses neighborhood impacts such as noise and crowd control. • Includes a neighborhood communications plan that is sensitive to the impacts and information needs of adjacent neighbors. e Minimizes environmental impacts and promotes sustainability through the use oflow-impact products and practices in the production and management of the event. • Limits concessions or services that are indirect competition with adjacent Pier businesses and provides for cross marketing opportunities with local businesses including Pier lessees. • Provides educational outreach to regional school children. • Provides activities throughout the day (exhibition style eventr versus timed performances). • Maintains as small a physical footprint as possible to preserve onsite parking maintain view corridors, and sites facilities to minimize neighbor impacts. • Allows for sufficient time to provide for comprehensive plan review and for adequate coordination with City services and stakeholder groups. • y_ _ ... ~ ,_ .. _ Licenses fcr performance or timed events will be granted onlydurin the period ~anuart through mid-P,1arch annualh~. License< fcr exhibition or untimed events may be Granted during the period i`lovember through March annua!Iy. Licenses for da yme sin ie day lar escale event th at do not meet the Communit Evan's G~idef.nes mad 6e ranted durin .he ariod Decembe. throw h Januar ~ 1 anrmall . • 'he license.. for timed events ~a~al'.,e required tc ne otiate a ercenta~e of ross sales as artof +he fee structure., • The licensee must pay for all City costs and services associated with the event, including but not limited to, 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. The City division responsible for the service shall determine the cost to be borne by the licensee. • The licensee must meet standard City requirements for insurance, indemnification, security, Police, Building and Safety, Fire Department, recycling, clean-u p, waste disposal and accessibility and receive all other necessary governmental approvals. • The event must have aCity-approved traffic and off-site parking plan. Proposals must include the folio wing information: • A detailed description of the proposed event or activity, including the event's purpose, the target audience and audience capacity, number of performances and projected attendance levels, ticket prices, and any planned VIP and(or sponsorship packages. • Proposed lease term. ® Rental offer for the site {a minimum rental offer plus any proposed method for additional City participation in the realized revenue generated by the event). The current minimum rental rate is $.98 per square foot pl us the average revenue per parki ng space per day that will be lost as a result of the event occupation for the duration of the event. A percentage of cress sales fcr Hermance or timed eventrmill be negotiatad as Hart of the rent__=I `ee. • Confirmation, in writing, that the event producer will pay for all City costs and services associated with the event(activity in addition to the rental payment. Costs will be dependent upon event specifics. • A list of food, beverage or merchandise to be sold with proposed prices. e A detailed schedule including dates for site preparation, move in, event schedule by date, day and time, move out and site restoration. All activities must conclude by 10:00 pm. a A detailed site plan that identifies the location of all structures to be installedflocated temporarily on the site to accommodate the proposed eventJactivity including but notlimited to event structures, toilets, access points, perimeter fencing and site improvements including utility needs. • A traffic and off-site parking plan that clearly describes the proposed daily event schedule, the corresponding projected parking demand and outlines an off-site parking shuttle program that will be implemented to address the parking and traffic impacts of the event. e Confirmation, (n writing, that event producer will comply with standard City requirementr for insurance, indemnification, security, police, Building and Safety, Fire Department, business licenses, recycling, clean-up, waste disposal, ongoing site maintenance, neighbor notices, accessibility and other governmental requirementr. • Proposed strategies for neighborhood communication and complaint resolution. • Proposed cross-marketing strategies with local hotels, restaurants and Pier businesses. • Three recent references including name ofvenue, address, phone and e-mail of on-site contact. June 9, 2010 projectNo. 1s475 ~~ /~ Revised October 11, 2010 /~I~V~ ~~~ r ~~~~~ [[ f \ Executive Summary -Cirque du Soleil Economic Impact Background In recent years the City of Santa Monica has initiated booking various large scale special events to support the city's economic development and cultural arts goals. The City Council adopted a policy and guidelines authorizing licensing a portion of the 1550 PCH lot for extended periods. The Council determined that during off-peak periods, booking events near the Santa Monica Pier that target a regional market was an effective way to draw a larger audience to the area and thereby boost Pier attendance as well as to provide needed revenue for beach maintenance and other public beach amenities. Such events have included the first North American run of Canada's Cirque du Soleil in 1987, regular Cirque du Soliel runs between 1987 and 1999, as well as the Ashes and Snow photography experience in 2006. The City recently contracted for a return of Cirque du Soleil (CDS), to perform from October 16 -December 20, 2009. These events have in common their location, on the 1550 PCH Beach Lot just north of the famed Santa Monica Pier. The 1550 Lot is a primary parking lot for the Santa Monica Pier and for beach goers. The event venues eliminate a portion of the lot's available parking. Recognizing this issue, the City included parking mitigations in their licensing agreement with CDS. CDS patrons were directed to alternative parking, with free shuttle service, in the Civic Center structure or the 2030 Beach lot, a few blocks from the Pier. Pier and beach visitors were directed to additional parking at the Civic Center area (former Rand Lot) across from the Pier. In addition to the parking mitigation efforts, CDS provided a variety of marketing promotions and funds to assist the Pier and Santa Monica Convention and Visitor Bureau. Many Santa Monica businesses support the return of CDS, recognizing that it generates economic and community benefits. However, some of the Pier lessees were concerned that the reduced 1550 Lot parking, despite the City's parking mitigation strategies noted above, would displace its visitors and reduce visitation during the three month CDS run and occupation of the 1550 Lot. One such key Pier tenant was Pacific Park, which expressed concern about potential negative financial impact on its business due to the loss of parking immediately adjacent to the Pier. As such, when approving the CDS license agreement, the City Council directed staff to conduct an economic impact study of the CDS 2009 production run. The City selected and retained the consulting team led by Economics at AECOM (AECOM) to analyze the net economic impact and fiscal benefits of CDS's 2009 performance run of "KOOZA". The AECOM team includes Lauren $chlau Consulting (LSC), retained to conduct a visitor intercept survey during the "KOOZA" event. Purpose of the Study Executive Summary -Cirque du Soleil Economic Impact /~1~C®M The City of Santa Monica retained Economics at AECOM to conduct a comprehensive economic impact study of hosting CDS taking into consideration both positive and negative impacts, based on actual visitor data collected during the event period. In undertaking this study, the City and related parties sought to understand: ® Overall net economic impacts of the CDS event, including revenues to the City, income to the Pier lessees, and overall economic impacts to the Santa Monica economy; The demographic and visitor profile of CDS and Pier visitors; ® Whether CDS attracted a broader cross-section of patrons to Santa Monica than would visit otherwise; and, ® To what extent did CDS's occupation of the 1550 Lot impact Pier visitors' parking experience. Analysis Approach The consultant team has devised an analysis methodology that is objective and transparent with the primary aim of answering the questions posed. by the City and the Pier Lessees. One of the challenges in an analysis that attempts to quantify the impact of `lost revenues' is the fact that there is no direct way one can quantify the visitors. that 'did not come'. Additionally, any `lost business' inventory maintained by individual businesses are inconsistent to be used in a comprehensive model. As a result the team's approach to the project involves a creative and robust analytical framework that relies upon consistent data sources. The analysis framework includes the following components to arrive at the final conclusions. a. On-Site and Online Survey - AECOM, with the help of LSC conducted a series of surveys targeted specifically at Pier and CDS visitors. The purpose of the survey was to understand the profile of event patrons, Pier visitor experiences and spending patterns. Approximately 300 on-site surveys were conducted at the Santa Monica Pier during November and December of 2009. These interviews were spread out during different days of the week and different time of day as well as varying locations on the Pier. In addition an online survey was conducted of more than 1,200 CDS attendees in two waves. A key outcome of the survey was determining the magnitude of sales at the Pier and within Santa Monica that can be attributed to unique CDS visitors. b. Collect CDS Operating Expenditures - AECOM collected information on the CDS expenditures as part of the "KOOZA" event. These were adjusted to account for expenditures that were locally spent by CDS in the City of Santa Monica as well as direct fiscal contributions by CDS to the City. These include expenses related to local contractors, local labor and wages, utilities and other purchases, catering and accommodation eta ii Executive Summary -Cirque du Soleil Economic Impact c. Gross Economic Impacts -The findings of the above two steps allow us to define the gross economic and fiscal impacts resulting from the CDS event on the City of Santa Monica. While the survey provides an estimate of spending by CDS patrons in the City of Santa Monica (at the CDS event, the Pier and elsewhere), the additional data provides us with the direct expenditures incurred by CDS as part of its event operations. Appropriate economic multipliers are applied to these direct impacts to estimate indirect and induced impacts. AECOM has used the IMPLAN input-output model to derive economic multipliers. Note that this impact number is not adjusted for any potential loss in revenues that Pier businesses may have suffered during the event period. d. Establish Baseline Performance of Pier Businesses - AECOM collected actual sales information shared by the Pier Lessees with the City (using appropriate confidentiality protocols) over the past five years. This information was used to establish a baseline performance threshold for Pier businesses. In effect this baseline is the order of magnitude expected business volume of Pier Businesses in the absence of CDS during the months of September through December of 2009. e. Determine Change from Baseline -Comparing actual sales at the Pier to the anticipated baseline sales for the event period calculated from previous years' trends, provide the net change in baseline. revenues resulting from CDS. The net change must be adjusted for sales attributed to CDS patrons (from the survey), to estimate the change in baseline (non-CDS) revenues during the event period. f. Define Net Economic Impacts -Net economic impacts are generated by adjusting the gross impacts calculated earlier for any net reduction of revenues as indicated in the step above. g. Qualitative Assessment of Impacts -Although the quantitative analysis is able to determine the overall impacts on the City and the Pier, it is unable to define any of the nuanced implications of the event to the individual businesses located on the Pier. It is unlikely that the impacts are evenly distributed across all businesses and are likely to vary by type of business, their location on the Pier and other factors. The consultant team met with Pier Lessees individually and as a group to understand the event impacts on their individual businesses. The qualitative information gathered through these meetings, interviews and written communications are included as part of this report. iii Executive Summary- Cirque du Soleil Economic Impact ~~~/r, Summary of Key Findings Survey Findings The on-site and online surveys were able to uncover a number of key characteristics of Pier and CDS patrons, their spending patterns, and perceptions of the overall experience in the City of Santa Monica. A key finding of the survey was that the CDS attendee and the typical Pier visitor were distinctly different in many respects. Additionally, the survey found that although the share of CDS visitors spent selectively at the Pier was small, those who did spend had a much greater per capita expenditure compared to the typical Pier visitor. Another key finding was that parking was a much lesser concern among the visitors surveyed, both at the Pier and at CDS. Finally, an overwhelming majority of the respondents found their experience in Santa Monica to be extremely satisfying and would visit again. In terms of visitor origin, the typical Pier visitor came from further away compared to the typical CDS attendee. Almost 84 percent of CDS attendees came from Los Angeles County compared to only 50 percent of Pier visitors. In addition, 20 percent of CDS visitors were actually Santa Monica residents, compared to only 6 percent of Pier visitors. Given the $100 ticket price, CDS visitors were older and higher income compared to the typical Pier patron. Pier Visitor Residence ~~ ~ ~ , ,: ~.te~r i:~ a CY u) 46%.. s~„r:~ ~ tit.`t zo~a s; ~ Approximately 86 percent of CDS attendees stated that CDS was their main .. Ciry of Santa Monica Other City within Los Angeles County ~~ California outside LA. County i Another U.S State outside California t9 CounUy outsitle the U.S. Cirque Visitor Residence z~ o% purpose. When this survey figure Is applied to the estimated 180,000 actual ,x";. zo%i , CDS visitors, CDS induced a total of `'` ~~~ > ~, 155,000 visitors to Santa Monica, and of ,;. those 21 percent, or 38,600 visitors ended up visiting the Pier as well -this reflects the induced visitation to the Pier as a 6a% Ciry of Santa Monica Other Ciry within Los Angeles County 3 California outsitle LA. county o Another U.S State outside California £i Country outside the U5. result of the KOOZA event. Of these CDS attendees who also went to the Pier, source: Esc, aECOM 60 percent ended up spending at the Pier. On a per capita basis, spending was comparable between CDS attendees who visited the Pier and visitors whose main purpose was to visit the Pier, $29.80 and $30.60 respectively. However, if you consider the per group expenditure of only those who spent money, CDS groups spent $98.50 relative to $75.00 by Pier visitor groups. Activities at the Pier were significantly different for visitors whose main purpose was to attend CDS versus visitors whose main purpose was to come to the Pier. As would be iv Executive Summary- Cirque du Soleil Economic Impact ~ . expected, those mainly visiting the Pier engaged in those who mainly attended CDS, however far mo restaurants than did mainly Pier visitors. The most was for Pacific Park where 32 percent of Pier goers CDS attendees. many more activities on the Pier than 'e of the CDS attendees ate at Pier significant difference in Pier activities went as opposed to only 3 percent of Clearly, the "KOOZA" event provided an opportunity to shdwcase the Pier and the City to a higher end `close to home' market with some potential for repeat visitation. However given their demographic profile, the primary capture of visitor spending from these patrons is in the eating and drinking category, especially in sit down restaurants. While it was presumed that parking would be a major inconvenience for Pier visitors, due to the closure of the 1550 lot, the survey results did not indicate parking availability next to the Pier was a deterrent to a majority of the Pier visitors. Certainly, the survey could not account for people who did not come at all or decided to turn back after seeing a lack of parking or congestion. The survey also did not account for lost business from special events, film crews, performances which were not booked due to a lack of parking. That said, over three quarters (79%) of Santa Monica Pier visitors who drove, indicated that parking was easier or about the same than when they usually park at the Pier. Only 4 percent of Pier visitors surveyed reported that they typically park at the 1550 lot and were displaced to anotheriocation. According to the survey, more Pier visitors parked in the 1550 Lot during the CDS performance than usually parked there. Additionally, 80 percent of CDS visitors parked in locations other than the 1550 Lot and Pier Lot. Pier Visitor Parking Locations during Cirque Relative to Usual Parking Locations "=0n[he Pier ~SSSO Beach LOt ®Gvic Center parking NUCture 220308each LO[I#45ouih)(OCean at Bicknell) a Otherparking sruc[ure orlot .a Santa Monica Place mall ®On the sreet or elsewhere o5urface lot across Ocean Avenue ®AnotherSM Beach parking lo[ Cirque Visitor Parking locations Parking Location During Cirque Usual Parking location ?Y On the Pier w 1550 Beach Lo[ ® Civic Cen[erparking structure O 20311 Beach Lo[ (# 4 South) (Ocean at Bicknell) ~ Other parking structure or lo[ :a Santa Monica Place mall g on the street or elsewhere ^ Sarface lot across Ocean Avenue ^AnotherSM Beach parking Ipt Source: LSC, AECOM V 3.8% 2.]% o% zo% qo% sov so% loo% Executive Summary -Cirque du Soleil Economic Impact I . Gross Economic Impacts Gross economic impacts from the CDS event are driven by three specific components • Direct onsite impacts from CDS o CDS operating expenditures, adjusted for local spending o `Intent' spending by CDS patrons Direct offsite expenditures by CDS attendees at the Pier and elsewhere in Santa Monica The above direct expenditures are organized by spending categories and appropriate economic multipliers are applied to determine gross impacts to the city of Santa Monica. In order to make conservative estimates of the impacts, AECOM uses the expenditure approach and does not include ticket revenues as a local impact to the city of Santa Monica. Onsite Impacts CDS spent a total of $4.2 million as part of their operations in the City of Santa Monica. Approximately 40 percent of this amount included event organization and management related expenditures such as rent to the City, public safety costs, traffic and parking management plan and shuttle services. It also included a $100,000 grant to the Pier for the Centennial Celebration and $100,000 to Pacific Park to assist in marketing. In addition, the survey data reveals that CDS attendees spent an average of $18.45 per capita at the event. This results in an `in tent' spending of $3.2 million throughout the event period. Adjusting this amount for retail margins to account for local spending the total direct impact of `intent' visitor spending is $2.1 million in the City of Santa Monica. ~: Total direct or on-site impact from CDS is $6.3 million. Of this amount $1.3 million was paid as earnings to employees supporting an equivalent of 42 jobs in annualized terms. TotalDirectlmpact $6,27Q000 $1,260,000 42 Source: AECOM Offsite Impacts CDS attendees spent $4.6 million elsewhere in Santa Monica in addition to what they spent at the event. CDS visitor spending by category is presented in the figure below: vi Cirque, Expenditures $4,170,000 $490,000 12 In-Tent Visitor Spending $2,100;000 $770,000 31 Executive Summary -Cirque du Soleil Economic Impact 1 ~, Santa Monica Revenues Generated by Cirque Attendees Food and Beverage Santa Monica Accomodations Parking Giles, Souvenirs, and Other Retail Rides, Arcade Games, & Other Entertainment Transportation Of this total, Santa Monica Pier captured a little under 20 percent, while the remainder of the expenditures occurred elsewhere in Santa Monica and for parking. :~ After further adjusting for local retail margins, the total direct impact from offsite spending in the City of Santa Monica is estimated to be $4.4 million, with $1.6 million in wages generating 59 jobs in annualized terms. Pier & Pacific Park $710,000 $26Q000 it Santa Monica $3,330,000 $1,210,000 47 Parking $320,000 $11Q000 1 Total Direct Impacts. $4,38Q000 $1,570,000 59 Source: Economics at AECOM Total Gross Impacts Combining the above two components, the total direct impact from the CDS event to the City of Santa Monica is approximately $10.7 million. These direct impacts generated an additional $6.5 million of indirect and induced economic activity in the City of Santa Monica with total gross economic impact of $17.2 million. Of this total impact approximately $5.3 million was in wages supporting 156 annualized jobs. vii Output $10;650,000 + $6,530,000 = $17,200,000 Earnings $2,830,000 + $2,400,000 = $5,250,000 Jobs 101 + 55 = 156 Source: AECOM Executive Summary -Cirque du Soleil Economic Impact /"~C®IVI Fiscal Impacts The event also resulted in a substantial fiscal benefit to the City of Santa Monica. The largest portion of fiscal impacts came from the rental contribution by CDS of $955,000 for use of the 1550 Lot. With adjustment, we include total direct benefits of $920,000 and $130,000 in other induced sales taxes, transient occupancy taxes and other taxes. :~ CDS produced a total fiscal impact of $1.1 million, which can be directly attributable to the special event. Direct Benefits from Cirquedu Soleil '. $920,000 Taz Benefits Sales Tax Receipts $60';000 Transient Occupancy Tax Receipts $60,000 AdditionatTaxes $10,000 Subtotal Tax Benefits $130,000 TotalPiscallmpactstotheCityofsantaMonica $1,OSQ000 Source: AECOM Reduction in Economic Activity and Net Impacts In aggregate, the businesses located at the Santa Monica Pier generated approximately $40 million in total revenue in 2009. This was a 4 percent increase from the previous year even when the overall economy shrunk by 2.5 percent (in terms of GDP) during the same period. It is, however, not uncommon for local attractions, such as seaside piers, to have improved performance during economic downturns. These attractions provide a more economical alternative to more expensive theme parks and out of town trips, and are able to capture a larger share of local residents during harder economic times. In addition to the economy the weather also plays a major role in Pier activity, especially the number of warm weekend days and holidays. To better understand the Pier's revenue patterns, AECOM indexed Pier monthly revenues over the last-five years to the annual average for each corresponding year. This annual index provides for better comparison of monthly revenues and adjusts for year over year increase in revenues. As shown in the chart below, Pier revenues show a strong seasonality almost identical across all years. viii Executive Summary- Cirque du Soleil Economic Impact e~C~/ ~ ^ The above chart clearly shows: • Summer is the best time for the Pier with revenues peaking in July. ® March; April, May and September represent average revenue months. • .October through February are low revenue months. • There is a steep decline in revenues between August and September, marking the end of summer. Undoubtedly, the months during which the CDS event was held were the historically low performing months for the Pier. During these months, the index shows about average performance in September and December 2009 relative to other years. October 2009 is slightly higher than other years and November 2009 is marginally lower than other years. To estimate the net impact of CDS during the months of September through December in 2009, AECOM looked at the variation of revenues for these months from the monthly average for the year over the 2005 to 2008 period. Comparing the historic data to 2009 data showed a net positive variation of approximately 3 percent in 2009. This translates to approximately $420,000 and represents. the net impact of CDS on Santa Monica Pier businesses. We already know that the Pier did well in 2009, the question is -Could Pier businesses have done better without CDS? We then compared this net impact to the survey findings, which show that CDS visitors spent approximately $800,000 at the Pier, a number considerably higher than the net impact based on historic trends. s- This means that CDS did displace approximately $380,000 in sales from the Pier, but. more than compensated for the loss by generating a substantial amount of visitor expenditures by its patrons who visited the Pier, creating a net gain of $420,000 to Pier businesses. This net gain in sales at the Pier would not have been possible without CDS. ix Executive Summary- Cirque du Soleil Economic Impact ®f Y Impact on Individual Businesses Although CDS generated a significantly positive economic impact to the City of Santa Monica and the Santa Monica Pier, the economic analysis presents these impacts in an aggregate basis. There is considerable variation in the manner to which different businesses along the Pier have been impacted. Confidentiality issues pertaining to revenue data prevents this report from making specific comparisons, but AECOM looked at broader retail categories at the Pier and interviewed Pier businesses to better understand the nuanced impacts. • Between 60 to 70 percent of purchases by CDS attendees were in the food and beverage category. The direct beneficiaries of this expenditure pattern were Pier restaurants. • In addition, given the demographic profile of CDS attendees, higher-end restaurants would have fared better. This is empirically confirmed by most Pier businesses. • Pier based entertainment, on the other hand, did not cater to the demographic profile of the CDS visitors. As a result these businesses were not able to capitalize greatly on the event. Based on AECOM's analysis of historic information, restaurants at the Pier performed 9 percent better during the CDS event than it would have otherwise, while entertainment businesses at the Pier experienced a 1 percent reduction in revenues during the CDS period than they would have otherwise. Pier Lessee Input The report also synthesizes the qualitative feedback from Pier lessees. In line with the quantitative analysis, Pier tenants described restaurants achieving increased volume from CDS while other businesses may have had some reduction in volume. However, even among restaurants the overall benefit of CDS varied. Tenants believed that it did bring a different demographic, but for some tenants, such as the entertainment businesses, it was not the appropriate market for their business. Businesses had several concerns with the CDS event, primarily the loss of parking as well as disillusionment with attempts to market Pier businesses to CDS ticket purchasers. Several Pier tenants reported that the 1550 Lot was important to attract special events and nightlife customers. Other businesses put in substantial effort working with CDS on marketing efforts that were ineffective in that they did not win CDS business or did not bring in a desirable level of additional customers. While not all businesses benefited directly from the CDS event, a few businesses thought GDS brought a substantial amount of positive attention to the Pier and that this was good for the Pier's Tong term reputation. Also, more than one tenant described how different events at the Pier impacted different businesses. This tenant described how filmings did not benefit their retail business or the restaurants along the Pier, but that they believed it was positive for a wide audience to become familiar with the Pier. x Executive Summary -Cirque du Soleil Economic Impact /'fr.rlr®l~i Conclusions • As shown below, the net economic impact generated by CDS's "KOOZA" performance to the city of Santa Monica was $16.7 million. Of this total impact approximately $5.1 million was in wages supporting 151 annualized jobs. CDS is a significant contributor to the Santa Monica economy. • CDS generated a total fiscal impact directly to the City of Santa Monica of $1.1 million. Source: AECOM • An estimated 156,000 visitors were induced to Santa Monica for the main purpose of attending CDS. Of these visitors, 40,000 also visited the Pier during their trip. • Isolating the impacts to the Pier, CDS generated a net impact of $420,000 to Pier businesses, even after adjusting for displaced sales. This net gain in sales at the Pier would not have been possible without CDS. • CDS attracted a distinctly different market demographic to the Santa Monica Pier. They were older, with higher incomes, and lived much closer to Santa Monica. • An overwhelming majority of visitors had an enjoyable experience at the Pier and would return. • Despite the City's parking mitigations, parking was still viewed as a significant issue by businesses along the Pier. However, parking was not an .issue among the Pier visitors surveyed. Over three quarters of Pier visitors who drove, indicated that parking was easier or about the same that when they usually park at the Pier. Approximately half of CDS attendees parked in the allotted Civic Center structure or 2030 Beach Lot and only 5 percent parked at the Pier. xi Executive Summary- Cirque du Soleil Economic Impact • Based on input from Pier businesses, most businesses did not believe they benefited from co-marketing efforts. The study demonstrates that CDS generated a positive net impact to the Pier, but even Pier businesses who felt like they benefited from the CDS presence did not believe the co-marketing efforts, themselves, generated significant benefits. • While 25 percent of CDS attendees visited the Pier, and 60 percent spent money, their spending was largely at restaurants, with only 24 percent spending any money at entertainment venues. • As mentioned above, CDS generated a positive net impact to Pier businesses, but the impact on specific types of businesses along the Pier differed. Entertainment businesses had a 1 percent reduction in revenues during the September through December 2009 period attributable to CDS, while restaurants had a 9 percent increase in revenues and even within categories, impacts differed. • Some Pier lessees did not reap direct benefit from the event; the direct marketing assistance provided by CDS should be better focused to help these businesses preserve their existing customer base during the event. ® On the whole, special events like Cirque du Soleil have significant near term and long term benefits to Santa Monica's tourism economy. Besides the obvious economic and fiscal benefits to the City, co-location of such a globally publicized event with a tourist icon like the Santa Monica Pier can yield intangible benefits for the Pier and the City over the long term that have not been quantified in this analysis. While the manner in which Pier businesses and special events coexist can be .improved upon continually, these events are important for the City, its economy, and the overall quality of life of its residents. xii . _, i - ~ti' ,{ i r~ 1i~~, '~~r~ r~e ~ i i -> rl.i .. . ~r, ..,_.. .,~ ~ ../..I Overview » The consulting team, led by Economics at AECOM*, was retained by the City of Santa Monica to analyze the net economic impact and fiscal benefits of the Cirque du Soleil's 2009 performance run of "KOOZA" on the gity of Santa Monica. • Cirque du Soleil operated a run of the theatrical performance "KOOZA" between October 16, 2009, and December 20, 2009 and occupied a portion of the beach parking lot immediately to the north of the Santa Monica Pier from September 14 through December 22nd. The event was welcomed by a number of local businesses as it was expected to provide an increased opportunity to capture from a broader visitor base. However, there was concern by some of the businesses located on the Pier that, despite mitigation measures put in place, there maybe a negative impact from Cirque, primarily attributed to the loss of adjacent parking. • To better understand the overall impacts of Cirque du Soleil's "KOOZA" in Santa Monica, the City of Santa Monica retained Economics at AECOM to conduct a comprehensive economic impact study of hosting Cirque du Soleil (CDS) taking into consideration all positive and negative impacts, based on actual visitor data collected during the event period. • To understand the full picture; this study utilized primary research as well as additional secondary data sources. Lauren Schlau Consulting (LSC) conducted a field survey of 300 pier visitors and an online survey of 1,270 CDS attendees between November and December 2009, documenting Pier and CDS visitor behavior and spending characteristics. Inputs from the survey, as well as revenue and sales data from the City of Santa Monica and Pier businesses were used by Economics at AECOM to develop the net economic impacts and fiscal benefit estimates. • This report presents the findings of this analysis, considering both the positive impact of CDS to the Pier and City of Santa Monica as a whole, as well as potential reductions in economic activity to the City of Santa Monica and Pier as a result of the CDS 2009 operations. *Formerly known as Economics Research Associates Page4 - -`®-"' Overview» Background of CDS in Santa Monica In recent years the City of Santa Monica has booked a number of large scale special events to support the City's economic. development and cultural arts goals. To accommodate such special events, the City Council adopted a policy authorizing licensing a portion of the 1550 PCH Beach parking lot (1550 Lot) for extended periods to provide revenue to the Beach Fund. - It determined that during off-peak periods, booking events in the large beach lot was an effective means to satisfy the community demand for local cultural events as well as to generate needed beach maintenance funds through visitor spending. • The 1550 PCH lot is located just north of the famed Santa Monica Pier, adjacent to the beach and to Pacific Coast Highway, and within walking distance of Santa Monica's Palisades Park and downtown Santa Monica. It serves as a parking lot for the Santa Monica Pier, beach., and other visitors. A number of annual events have been held in the 1550 Lot across the last two decades. Events have included the first North American run of Canada's now legendary Cirque du Soleil in 1987, subsequent CDS performances every two years until 1996, and CDS performances in 1996, 1997, and 1999. Cavalia, an equestrian show similar to CDS, was held at the lot in 2004; and in 2006, the Ashes and Snow photography experience was held in the 1550 Lot. Page 5 ~~®~ 6i ~ . ~w c..... v.3 <,e ~ ~. :. Li Overview » CDS's 2009 Performance Run of "KOOZA" • CDS returned in 2009 with its show "KOOZA", which ran from October 16 -December 20, the subject of this report. KOOZA, similar to the other events at the 1550 Lot, required temporary structures to be erected on the lot thereby eliminating portions of available parking. • City of Santa Monica's License Agreement required CDS to pay rent for the space and also required CDS to 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. • City of Santa Monica's License Agreement with CDS included several parking mitigation strategies and other marketing assistance intended to help the Pier and other Santa Monica businesses, generally: - To mitigate the parking impacts on pier businesses, pier and beach visitors who drove to the 1550 Lot were directed to alternate parking in the nearby Civic Center lot or the 2030 Ocean Beach lot, both of which provided free shuttle service. - CDS attendees could access parking information through a link on the CDS website to the City of Santa. Monica website, where parking and directions were given specific to performance time and day. - Strong cross-promotion with the Pier Restoration Corporation (PRC) and Pier tenants to provide value-added offers (i.e. restaurant promotions and rebates) on the CDS website during the entire sales period, beginning March 2009, along with email bulletins sent to the 490,000 Cirque Club members in California and 1.6 million worldwide. Page 6 " '"-~~" "' I '""" 1~9 t ~i7 V ' \... 43 ~ ~ ~~' ~. Overview»CDS Support and Concerns • Public input to the City included support from the City's restaurants and hospitality sectors regarding opportunities for increased economic benefits to their businesses from CDS, especially in light of the current economic downturn. • While parking mitigation measures were put in place, Pacific Park, a major Pier lessee, and the Pier Aquarium expressed concern about a possible negative financial impact on its business due to the temporary loss of parking immediately adjacent to the Pier. • Given these concerns, the City retained the consultant team to complete an objective assessment of the impacts of the CDS's 2009 occupation of the 1550 Lot. Page 7 -~ Overview» Study Description The consulting team undertook a comprehensive study to quantify both the positive impact of CDS to the Pier and City of Santa Monica as a whole, as well as any reductions in economic activity to the city of Santa Monica and Pier as a result of the CDS 2009 operations. The report evaluates: - Overall net economic impacts of the CDS event, including revenues to the City, income to the Pier lessees, and overall economic impacts to the Santa Monica economy - The demographic and visitor profile of Cirque du Soleil and Pier visitors - Whether CDS attracted a broader cross-section of patrons to Santa Monica than would visit otherwise, and - To what extent did CDS's occupation of the 1550 Lot impact Pier visitors' parking experience. Project Team The consultant team was led by Economics at AECOM, formerly known as Economics Research Associates. Economics at AECOM has over 50 years experience in the visitor and attraction industry and is considered the industry leader in the specialized field of economic planning for recreation and entertainment projects. Based in Los Angeles, Economics at AECOM has completed numerous economic impact studies for attractions, events, theme parks, convention centers and large-scale destinations. Economics at AECOM performed the economic and fiscal impact analysis for this study. Lauren Schlau Consulting (LSC), based in downtown Los Angeles, specializes in consulting and market research related to economic development, and has extensive experience working with cities, visitor bureaus, attractions and special events throughout Southern California. LSC was responsible for overseeing the market research process and performed the patron analysis of this study. Page 8 _ Tiro" "" ~~ ..~, i ~~. ,._a Overview » Study Description Report • This report highlights the key findings of the survey and economic impact analysis. Additional detailed information can be found in the Appendices. • Section I presents an overview of the study and background on the CDS's Terms and Conditions. • Section II, Key Survey Results, describes the findings from the survey that relate to building a general profile of CDS visitors and Pier visitors, parking and the specific survey points, purpose of visit, and spending that are inputs into the economic impact analysis. -The full survey report is included in Appendix I and includes the detailed tables that describe visitor activities, characteristics, and CDS visitor's experience at "KOOZA" ih full. • Section III, Economic Impact Analysis, describes the net impacts to the city of Santa Monica's economy. It presents arr overview of economic impacts and presents the economic impact results. This section first evaluates the gross economic impacts due to CDS's 2009 operations and then looks at any potential reduction in economic activity as a result of these operations: This section also highlights direct inputs from Pier Lessee's regarding the impact of CDS. -An outline of the economic impact methodology can be found in Appendix IL -Detailed tables documenting the derivation of the total economic impacts can be found in Appendix III. • Section IV, Fiscal Impact Analysis, describes the revenues to the City of Santa Monica. This evaluates the direct benefits from leasing the 1550 Parking Lot and other revenues from taxes generated by CDS attendee's spending. • Section V briefly summarizes the economic and fiscal impact results. Page 9 ~®~ -{ ~ r, z~a Background » Cirque du Soleil (CDS) License Agreement Terms and Conditions • The City of Santa Monica's License Agreement allowed Cirque du Soleil (CDS) to operate on the 1550 Lot from October 16 through December 20, 2009, occupying approximately 721 of the total 1,017 spaces in the 1550 Lot. • The License agreement included several terms and conditions to maximize the benefits of the CDS's presence in Santa Monica for the City, businesses, and residents. Economic Terms • City of Santa Monica's License Agreement required: - CDS to pay $955,000 in rent for the space; - Contribute 25 percent of gross parking revenues for use of the Civic Center lot until the lot improvement costs were recouped and 100 percent, thereafter; - Make a substantial contribution for the Pier Centennial; - Also required CDS to 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. Parking Mitigations • CDS was responsible for improving a portion of the Civic Center lot (former Rand lot) for public parking that was made available to Pier and beach visitors. • To mitigate the parking impacts on Pier businesses, Pier and beach visitors who drove to the 1550 Lot were directed to alternate parking in the nearby Civic Center lot or the 2030 Ocean Beach lot, both of which provided free shuttle service. • CDS attendees. could access parking information online through a link on the CDS website directing them to the City of Santa Monica website, where discounted parking and directions were given specific to performance time and day. CDS patrons were directed to park in either the Civic Center Parking Structure or the 2030 Beach lot; free shuttle service to and from the CDS tent was available from each location. • Email to CDS patrons in the event of high projected demand due to overlapping Pier and CDS events. • Provide traffic control officers before and after the shows at specified locations. ~ ~~oM • Provide attended bicycle valet parking in the 1550 lot. l~i~:~ Page 10 lv, J\y' Background » Cirque du Soleil (CDS) License Agreement Terms and Conditions Marketing Conditions • The License Agreement outlined a list of marketing efforts to encourage strong cross promotion with the Santa Monica Convention and Visitors Bureau (CVB), Pier Restoration Corporation (PRC) and Pier tenants, to include: - Offering Pier merchants the first opportunity to develop special offers to CDS ticket holders; - Offering 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; - Reciprocal links on the CDS website to the. Pier and CVB; - Value-added destination packages to be sold through the CVB; - Public relations collaboration around the Pier Centennial, including promotion in CDS advertising material and e- messages to the 1.6 million worldwide Cirque Club members about Centennial Pier events; - Development of a process to allow for coordinated scheduling and planning with the PRC and Pier lessees in cases of overlapping large events; - Placement of a temporary ticket booth on the Pier deck, if permitted by available technology; - Targeting of $300,000 of marketing funds for local media buys; - Development of a catering RFP for Pier tenants to serve the VIP functions; offering opportunities to Pier tenants to provide concession products and services. Neighborhood Impacts and Community Outreach • Establishing 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. • Monitoring of noise during the event periods. • Preparation and distribution of a Community Newsletter. • Forging educational partnerships. Page 11 ~~~~ ~° . ti_.. ~. ~.~ ~ >>~.~ Page 12 ~ ""!~"°' Background » Cirque du Soleil (CDS) License Agreement Terms and Conditions i a . / i~ v ~ Overview of Survey» • A key element of this study is the primary research, performed by Lauren Schlau Consulting (LSC). LSC conducted a survey analysis to obtain direct visitor spending data and to better understand the overall Cirque du Soleil (CDS) and Pier attendee profile; and visitation dynamics. • Questions addressed by the survey include: - What was the demographic profile of CDS attendees and. Santa Monica Pier visitors? Who was the target audience of each venue and to what extent were their demographics and visitation complementary? - What were the economic impacts to Santa Monica by Santa Monica Pier visitor and CDS attendee spending during that specific visit? - Did this event attract a broader cross-section of patrons to Santa Monica than would visit otherwise, offering marketing opportunities for the City and for its venues? - To what extent did the CDS location at the 1550 Lot impact Pier/Pacific Park parking and attendance? • The following section first provides a brief outline of the survey process and then highlights those data points most pertinent to understanding the overall impact of CDS on the Pier and Santa Monica. First, we review the overall profile of CDS visitors and Pier visitors, then we highlight those data points that will be inputs into the quantitative economic impact analysis, induced visitors and visitor spending. • A full report on the findings of the market research can be found in Appendix L Interviews and Survev • After reviewing background data on Santa Monica special events, CDS and Pacific Park performance and related data, survey interviews were conducted. The survey data encompasses: - On-site interviews with 302 CDS and Pacific Park patrons at the Santa Monica Pier (Pier) between November and December of 2009. 56 percent were interviewed at the entrance to Pacific Park and 44 percent were interviewed at the Carousel area. - An on-line survey of 1,265 CDS ticket-purchasers (from an a-mail list of purchasers provided by CDS) in mid- December. Page 14 ~~O' °' Overview of Survey » • Survey data was cross-tabulated based on several segments, including :visitors' main purpose, area of residence, age, income, performance time, overnight visitor or day visitor, and previous visitation to Santa Monica. - While each segment's data was reviewed, we focus primarily on visitors whose main purpose for coming to Santa Monica was either CDS or the Pier in this report. • The sample variance of the total 1,567 on-site and on-line interviews is 2.5 percent (at 50 percent response), at the 95 percent confidence lever. - The 302 respondents interviewed on-site at the Santa Monica Pier have a sample variance of 5.6 percent (at 50 percent response), at the 95 percent confidence level. - The 1,265 CDS attendee respondents interviewed on-line have a sample variance of 2.8 percent (at 50 percent response), at the 95 percent confidence level. • Interview data was collected by groups, the response data were weighted to represent responses for individuals rather than for groups then analyzed to develop the behavior and demographic profile. Sample Survey Table (q1A) Where do you reside? `Main P u~pasa '_ ~t esideaae ' ' • Aga ,~ .. , InGO ~ne (*$3 ~OOR9 - pier ~ ~ CR6 9M ~ `LA`OO- ~ CA ~~ U5 ~ 1nt't 18,34 -~6-b? ssfi «OOs -199 2gUt Base: Respondents 1567 228 1131 255 912 239 105 56 456 730 381 567 393 187 A city or area within Los Angeles County 59.9% 46.4%;. 0.0% 100.0% 0.0% 0.0% 0.0% 55.5% 61.2% 60:8% 61.7% 57.0% 59.2% Santa Monica 16.6% 6.3°(° ii. 00.0% 0.0% 0.0% 0.0% 0.0 % 11.2% ll.0 % i2 1% 16.2% In California outside L.A. County i4.2% 19.7% 12.9% 0.0% 0.0% 100.0% 0.0% 0.0% 16 9% 13.5%. 13.5% 14 0°/0 11.6% In another U.5 State outside California 5.7% '-L4°/ ! 0.0% 0.0% 0.0% 100.0% 0.0% 8.7% 4.9% 4.6% 4.4% 3.2% in a country outside the U.S. 3.6% 50.4% :' 0.0% 0.0% 0.0% 0.0% 100.0% 1 8% 9 4.1 % 3.6% 4 1% i 1% -. Tested to 0.95 significance level COLOR Indicates significantlyhigher/lower value from the comparison. Comparing to 'Total' Weighted by group size tAt the 95% confidence level and 2.5% sample error for the 50% response level, means that on an average of 19 times out of 20 (or 95 times out of 100), the sample proportion obtained will be within 2.5% of the true value, that is responses falling A ~~®Iw within the range from 47.5% to 52.5%, will be statistically comparable. P'!.~ X17 J ~i .. ...:.D v I3 ! r.l ..~ \ r _vs ~ l i~v `.'...3' ~ ~+1 l1 W .J..J Profile of Pier and CDS Attendees » As mentioned above, the survey report includes data by various groupings, but for the purpose of the economic impact analysis we focus primarily on those visitors whose main purpose for coming to Santa Monica was either CDS or the Pier. - 71 percent of total respondents indicated their main purpose for being in Santa Monica was to see CDS, 14 percent were mainly visiting the Pier, and 15 percent were drawn to Santa Monica for other reasons. - The higher number of CDS respondents is to be expected given the high number of on-line CDS respondents surveyed and is not indicative of preference. • This section present a summary of the characteristics of Santa Monica and CDS main purpose visitors Audience Attracted by Residence and Demographics • The table on the next page displays the residence and demographic data based on the survey. While there was some overlap, the Santa Monica Pier attracted a greater share of non-local visitors, whereas a high share of CDS attendees were Santa Monica and Los Angeles County residents. - 84 percent of CDS visitors resided in Los Angeles County, and almost 20 percent of this number were from the City of Santa Monica. - Approximately 50 percent of Pier visitors were from Los Angeles County with only 6 percent from Santa Monica. The other half included, 20 percent from areas outside of Los Angeles, but within California, 16 percent from other states within the US, and 12 percent international. • Given the higher share of Los Angeles area residents, a much higher percentage of CDS attendees, 83 percent, had visited Santa Monica in the past year versus 55 percent of mainly Pier visitors. Page 16 - -~®~"" "~ ° ~. ~'' ,r Profile of Pier and CDS Attendees » • In line with those figures, more CDS visitors, 56 percent, had visited the Pier in the last 12 months relative to Pier visitors, 48 percent, suggesting that up to 44 percent of CDS attendees could be potential new Pier visitors. • CDS's audience was of much higher income, older and less ethnically diverse than the Pier visitor. - The higher income of the CDS visitor is not surprising given the CDS's $100 ticket price. Overall, CDS likely had far less impact in attracting out-of-county visitors to Santa Monica than did the Pier. However, with the 17 percent of CDS attendees who had not visited Santa Monica in the past twelve months, it can be assumed that a small market of additional older, more upscale patrons were attracted to Santa Monica due to CDS. MainPurpose Total 'Pier/PP Cirque '"z Total LA.CountY 76.50% 52.70°/ 84.20% ". California outside L.A. County 14.20% 19.70% 12.90° ~~~a Another U.S State outside Califorgia 5.70% 16.00% 2.40% 4.--!. Country outside the U.S. A ~ Visited Santa Monica (past 12 months; non-SM resident) 3.60% 75.60% 11.60% 55.40% 0.40% 82.70% ?t1=~ Avg. Number of past visits to Santa Monica u-:' ~~:! Visited Santa Monica Pier in past 12 months (all respond) ~L, 11.01 65% 3.59 48% 13.72 66% G` Avg. Number of past visits to Santa Monica Pier 3.4 2.7 3.5 '~z=" Main Purpose Today: See Cirque du Solell 71.30% 0.00% 100.00% Visit the Santa Monica Pier 14.20% 88.20% 0.00% Visit Pacifc Park ~~ 1.90% 11.80% 0.00% Single adult 29.70% 39.50% 25.80% Household: Married/partnered couple with children 28.80% 29.80% 29.40% Household: Married/partnered couple without children 26.00% 18.00% 28.30% ~~' ~ Median a e of res ondent 9 P 43.14 31.75 46.23 ~= Caucasian 63.10% 59.60% 64.70% ' HispaniULatino 12.70% 19.30°/ 11.10% ,Asian/Asian American 8,20% 7.90% 8.00° African/African American 3.00% 4.40% 2.60% Median household annual income $100,985 $66,667 $109,891 Respondent°/:Female 53.30% 50.40°/ 55.10% - Respondent%: Male 46.70% 49.60% 44.90% f Source: LSC w~ Profile of Pier and CDS Attendees » Activities in the Santa Monica • Overall, 25 percent whose main purpose was attending CDS did visit the Santa Monica Pier the day they attended CDS. -About one-half were influenced to visit the Pier solely because they saw the Pier from the CDS area. - Had the event been staged elsewhere in the city likely fewer would have visited the Pier and surrounds. • Respondents also had other purposes than the Pier or CDS; -Among Pier visitors, 50 percent were there to stroll, 32 percent also went to Pacific Park, 29 percent named the Pier as another purpose, 10 percent went to CDS, and 10 percent were thereto shop, Only 3 percent of Pier visitors had."no" other than their main purpose. - Among CDS visitors, 35 percent also ate out in Santa Monica restaurants, 25 percent visited the Pier, 15 percent named CDS, 14 percent were just walking around, 10 percent went to 3rd Street, while 3 percent also went to Pacific Park. Of these attendees, 31 percent said they had "no" other than their main purpose that day. Other Activities in Santa Monica Eat in a Santa Monica restaurant Visit the Santa Monica Pier ' Just walk around/sightsee/hang out ®CDS 6Pier '~ "'"'- See Cirque du Soleil ~ '. '. Shoe/browse Go to 3rd Street Promenade '. Go to Pacific Park `'' Goto the Santa Monica Beach ~ ! ', Visit friends or relatives/personal ' Bike/skate/stroll along the boardwalk ~`'~~"'" Go to Montana Avenue e_. "~ ': Go to Main Street/Parmers Market ~.:_.._ i - Goto a Santa Monica night club or bar Conduct Business or attend a meeting No other venues/activities Other Activities '. 0% 10% 20% 30% 40% 50% Page 18 CDS =Cirque du Soleil Visitors Pier =Pier Visitors Source: LSC, AECOM ~O/.1 ~ f~ ~ ~') a Cy r a n i w. ... ~ ~ / J ~ r. .} ice..: `iJ'/ a \..~JV....~ ~ i ~ la Profile of Pier and CDS Attendees » Santa Monica Pier Activities and Ratings • As would be expected, those mainly visiting the Pier engaged in many more activities on the Pier than those who mainly attended CDS, however far more of the CDS attendees ate at Pier restaurants than did mainly Pier visitors. The most significant difference in Pier activities was for Pacific Park where 32 percent of Pier goers visited versus only 3 percent of CDS attendees. • The Santa Monica Pier experience was rated highly by those mainly visiting the Pier and those mainly attending CDS. In fact, somewhat surprisingly, the Pier was rated highest by the highest income group. - Of all respondents who visited the Santa Monica Pier, 77 percent found the experience very or extremely enjoyable, while only 5 percent found it not enjoyable. The overall mean rating was 4.03 (out of 5), or "very enjoyable." - Those mainly visiting the Pier rated their experience slightly higher than CDS visitors, at 4.19 versus 3.94 for those mainly attending CDS, both in the "very enjoyable" range. - For the 5 percent of Pier visitors with an unenjoyable Pier experience, 37 percent cited difficulty parking. While parking was the main reason stated, it equates to less than 2 percent of all Pier visitors surveyed. Main::Purpose '. ToWI Pier/PP Cirque rte? To Activities on SM Pier P ~* ~,ua~~ lust stroll/sig htsee 62.90% 51.50% 66 50% ~>~~. Cy ~ Eat at a Pier restaurant/snack shop 28.80% 22.00% . 35.40% ^p_~- Play games at Pacific Park 24.10% 43.90% 13 10% ~~4 ~ Ride rides at Pacific Park 21.00% 37.80% . 1230% r ~ ;y;.,,:;;y~ ~ Browse or shop at Pier shops 2030% 17.90% 20.20% ~ ~f {' Play games at the Playland Arcade 16.40% 32J0% 8.50% ~~ ?8„,~sr~,, Eat at the Pacific Park food outlets 15.00% 24.60% 11.10% Source: LSC Page 19 ~~®_ " - r ~ Profile of Pier and CDS Attendees » Spending Pier visitors and CDS attendees had a wide economic impact not only on their respective main venues but throughout the city, particularly by those for whom CDS was their main purpose. Overall, 87 percent of all respondents regardless of their purpose spent money in Santa Monica the day they were there: - Overall, 73 percent of groups who went to CDS spent in the tent and spent an average of $33 per group - 71 percent of all groups who went to the Pier spent on the Santa Monica Pier and spent an average of $59 each - 42 percent of all groups spent elsewhere in Santa Monica that day and spent an average of $56 each. This figure excludes money spent at CDS or along the Pier. Spending will be reviewed more closely at the end of Section II. -Main Purpose Total Pier/PP `: Cirque ~_=~~_ ~:, % Spent money at Cirque du Soleil a~ -._•<; ~`" (per all groups who sent to Cirque) 72.60% 63.00% 71.80% ,n: ; Average Spent at Cirque du Soleil "~~ ice; (per all groups who went to Cirque) $32.53 $29.67 $32.48 ~;~ ° /o Spent money at Santa Monica Pier er all rou s whowent to the Pier 70.50% 83.80% 62.50% Average Spent at Santa Monica Pier . (Per all groups who went to the Pier) `~~ $58.57 $56.99 $61.20 %Spe nt money in Santa Monica area ~'~=~ (per all groups) 41.60% 17.60% 42.70% Average Spent in Santa Monica excluding Cirque and Pier Spending \fi (per all groups) $55.79 $36.64 $51.89 "a ;~, ~. Av s g. pent for parking (per ca r) $5.84 $4,73 $6.29 aource: ia~ Page 20 /Y'1v6.M/II ~ r J .iJ Profile of Pier and CD. Parkina t 3 Attendees » • As most respondents, 91 percent, arrived in Santa Monica (or to their venue) by driving, conveniently located and available parking would be an important factor in their experience. • 80 percent of CDS visitors parked in parking lots other than the 1550 Beach Lot or the Pier. • 25 percent of Pier visitors parked on the Pier the day of the survey, comparable to the percentage of Pier visitors who usually park there, 20 percent used another unspecified site, 13 percent used Santa Monica Place. Of note, 11 percent of Pier visitors reported parking at 1550 PCH that day while only 4 percent of Pier visitors reported that they usually park there. • Over three-quarters or 79 percent of regular Santa Monica Pier visitors and who drove that day indicated parking was easier (25%) or about the same (53%) than when they usually park at the Pier. Conversely, 22 percent said parking was somewhat or much more difficult. The mean rating was 2.97 (4 =easiest to 1 =much more difficult). • Of all respondents who drove, 35 percent reported that parking Santa Monica. Pier Visitor Parking Locations during CDS Relative to Usual Parking Locations <~Onthe Pier ®Clvic Center parking structure a Other parking structure or lot ®On the street or elsewhere ®Another SM Beach parking lot Parking Location During Cirque in general has no impact/not a problem when they visit d 1550 Beach Lot k7 203° Beach Lot (R 4 South) (Ocean a[ Bicknell) Santa Monica Place mall ^ Surface lot across Ocean Avenue Cirque Visitor Parking Locations 3.8% 2.7% '~Onthe Pier ~ 1550 Beach Lot ®Civic Center parking structure :~ 2030 Beach Lot (# 4 South) (Ocean at Bicknell) ®Other parking structure or lot ~ Santa Monica Place mall ®On the street or elsewhere Usual Parking Location o Surface lot across Ocean Avenue ®Another SM Beach parking lot Source: LSC, AECOM 0% 20°/a 40°b 60% 80% 100% 0 m G n .. 4 ~,., z ~ ^. r -. ~ ~F r n ,~, . ~ s ; '~ ~ d N s', ~ R 9515 iiC ~~ E ~ ~~1 ~~ 6~ ~ ~ ` . ., ~ ~ ~ .~ ~ ~-. r . , ,. ,& p . ~ m m~ T pn N a m o o ~ ° ~ o o Nx o~ 3 < < ~< < ~ 0 3 D G D m v a n n , ~ ~ a ~° ~ ~< <~ ~ ° l o " a~ m ~ m m m m m v W a w T N a s °1. ` '-^. 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N p V W N + N O N W UI N A A A O O ~ W W N 01 P A N A A b ~ A O O~ O o O o O O W O O O O O O ~O N O N 01 l T V 0 I T W O NI UI O ;p W F 0 0 N 0 W 0 I+ 0 A 0 °I 0 ~ V 0 V 0 ~ ~ ~ V1 m o V p W p ' ~ ~ ~° 0 N 0 W ° - ° C ~ 2 ' e b 2 ` o a ~ e d~ o e o o a o 0 N 0 o c e o o ry 0 0 CD u'" V O ~ ~~ ~ ~~ ~ ~~~ a µ C7 D M a ~" fD V V i} Inputs to Economic Impact Analysis » Induced Visitors • Many visitors participated in more than one activity while in the Santa Monica area, but for the economic analysis we want to isolate the economic impacts of those visitors whose sole purpose in the area was CDS, i.e. without CDS's presence in Santa Monica, these visitors would not be in the area. All of these induced visitors impacts at CDS and within Santa Monica can be directly attributable to CDS's presence. - By comparing the visitors whose main purpose was CDS to all CDS visitors we are able to estimate the induced CDS visitors. - 1,300 respondents went to CDS performance, while 1,100. said CDS was their main purpose for being in Santa Monica. - From there were are able to look at the number of induced visitors who also went to the Pier and Pacific Park. • The table below identifies the share of CDS attendees who were induced to the area due to CDS and the share of those visitors who also visited the Pier. Survey Respondents rque Visitors tal Survey Respondents who went to Cirque Survey Respondents Whose Main Purpose was Cirque Survey Respondents Whose Main Purpose was Cirque and went to the Pier Survey Respondents Whose Main Purpose was Cirque and went to Pacific Park tal Survey Respondents who went to the Pier Survey Respondents Whose Main Purpose was the Pier LSC, AECOM 1,567 %ofTtl Respondents Cirque Visitors 1,309 100% 1,131 86% 279 21% 38 3% % of Ttl Pier Respondents Visitors 655 100% 228 35% Page 23 - -e®- " "' Inputs to Economic Impact Analysis » Per Capita Spending Estimates • In the economic impact analysis, we utilized the average spending per group data from the survey to estimate a per capita spending figure for each category. - To calculate per capita spending, per group spending figures are divided by the amount of people the spending was reported for*. • The figure below represents the average group and per capita spending across those who visited the Pier. Avg.Group:Spendingby:. Segment Avg:: PerCapita3pendingby'.> Segment` 'All MainPurpose.: All MaIn:Purpose Segments Pler Clrque Segments Rier '.' Clrque ; Pier Snendina Pacific Park Food & Beverage $15.92 $15.30 $19.17 $9.20 $8.64 $8,88 Rides & Arcade Games 6.68 13.03 3.48 3.86 7.36 1,61 Gifts&Souvenirs 3.37 2,42 3.58 1.95 1.37 1.66 Remaining Pier Food & Beverage 16.76 11.77 18.98 9.69 6.65 8,40 Gifts&Souvenirs 4.42 6.34 2.08 2.55 3.58 0,96 Other Spending 2.40 2.08 1.63 1.39 1.18 0,75 Admission Tickets 12_06 8.53 16_26 6.97 4.82 7.53 Total Pier Spending $58.57 $56.99 $61.20 $35.61 $33.60 $29.79 Source: LSC, AECOM Average Per Capita Spendi ng at the Pier ®Clrque Pier a a 3 $o.oo $io.oo $zo.oo 530.00 $40.00 *It should be noted that this questions was not included in the online survey. The face-to-face pier survey data was used as a proxy for all respondents for this question. Page 24 ~~~' "' i ~ , ~~ t ~~ Inputs to Economic Impact Analysis » Per Capita Spending Estimates • Both visitors whose main purpose was the Pier or CDS spent in Santa Monica. CDS visitors groups spent an average of $52 while, Pier visitor groups spent $36 in Santa Monica. The difference in this spending narrowed on a per capita basis. These figures represent average spending across all visitors. • The In-tent CDS spending is only calculated for those who went to COS. All groups who went to CDS spent an average of $32. 'r Avg. GroupSpending by.:` Segment Avg,Per Capita Spending by Segment= '. All ': Main Purpose- All '. MainPurpose Segments Pier Cirque Segments Pier - Cirque Snendine in Santa Monica (Excluding Pier and Cirque Spending) Food & Beverage $38.18 $8.80 $39.74 $22.07 $4.97 $18.40 Overnight Lodgingin Santa Monica 8.14 15.68 5.83 4.71 8.86 2.70 Gifts/Souvenirs/Others Shopping Item 6.56 8.99 3.48 3.79 5.08 1.61 Transportation Costs (Gas, Fares, etc.) 2.59. .0.90 2.59 1.50 0.51 1.20 Movie, Clubs, or Other Entertainment 0.33 0.24 0.21 0.19 0.14 0.10 Total Santa Monica Spending $55.79 $36.64 $51.89 $32.25 $19,55 $24.00 Avg. Group Spending-by Avg:Per Capita'Spending by Segment Segment i All `.Main Purpose All' MainPUrpose - Segments ?Pier Cirque Segments PieC: Cirque In-Tent Cimue du Soleil Spending Food and Beverage Spending $15.69 $14.13 $15.55 $9.07 $7.98 $7.20 Gift&Souvenir Spending 16_22 13_72 16.62 9.38 7.75 7.69 Total ln•Tent Spending $31.91 $27.85 $32.17 $18.45 $15.73 $14.89 Source: LSC, AECOM Average Per Capita Spending in Santa Monica ^Clrque ®Pier 3 F $o.oo $io.oo $zo.oo $ao.oo Average Per Capita Spending in Cirque Tent ^Clrque ®Pier $0.00 $5.00 $10.00 $e15.0~0r M$20.00 /LYr®/-^ Page 25 i`J, L ~,./ ~ ri, ~ _l I 11 i~ ~ ~1 l~t ~ ~~- rl ii i~ v~ '2 li ~ ~ ~ ~~~ ~ ~w Yya Overview» Defining Economic Impacts • The section analyzes the net economic impacts of Cirque du Soleil's "KOOZA" performance to the city of Santa Monica. What are Economic Imaacts? Economic impacts quantify the total economic impact resulting from a particular activity in an economic region. • Total Economic Impact is composed of: - Direct Impact: The direct spending in the economy attributed to Cirque du Soleil (CDS) activities. The first round of spending includes impacts from CDS's onsite operations as well as impacts from additional visitor spending offsite. - The `Multiplier Effect' Resulting in: • Indirect Impacts -Additional output, earnings, and employment generated as a result of the purchases of the industries which supply goods and services to CDS and its visifiors. • Induced Impacts -Additional output, earnings, and employment generated as a result of the purchases of employees in the supplying and supporting industries. - Total Impacts: The cumulative impact of the above components. ~=~~~ + Page 27 - ""-~O~ _ w _ ~ ..~ . ~ Fa ' ... . 1. 1 ~ .. ~ ~ ~ ' ] i., ~t l (.-~'~ ~...~ iw u`"i!1 s e v~ Ll ~'~~ ~,...:) s v.~' Overview» Impact Metrics • Economic impacts are expressed in terms of the following metrics: - Output -Total dollar value of goods and services produced across all industrial sectors within the defined geographic region (city of Santa Monica). - Earnings -The component of total output that is attributed to income and wages. - Employment -The total number of new jobs created in the economy. IMPACT COMPONENTS -1NDIRECT& INDUCED 7M PACT OUTPUT U ~ EARNINGS ti. U 4 EMPLOYMENT i~ • ~ Page 28 ~~ r 1 ~ -.. f ! _. ... .... ,/ .. ~~ ~ .. ~..J ~'~ u ~ ..~ i_.',i L,~ l~ ~ \~~ Ll lad Cu.i J ~'~ v `/ J ~ :J Overview » Net Economic Impacts • For this study, the City of Santa Monica and various stakeholders are interested in the net fiscal impact of CDS. • Thus, the economic impact analysis includes two major analysis components: - Analysis of the gross economic impacts resulting from CDS; and - Analysis of any potential reductions in economic activity (displacement) as a result of CDS. • Gross economic impacts are combined with any reductions in economic activity to determine the net economic impact of CDS. AECOM utilizes the primary data developed by LSC and information provided by CDS to calculate gross economic impacts. Pier revenue data provided by the City of Santa Monica and additional revenue data provided by pier tenants is utilized to estimate the reduction in economic activity. • The methodology section in Appendix II describes the calculation of the gross economic impact and the analysis conducted to estimate the reduction in economic activity due to CDS. Page 29 Net Economic Impact Calculation J Gross Economic Impacts » Direct Impacts Onsite Direct Impacts • Onsite direcfi impacts are composed of the CDS's performance-related economic activities within Santa Monica and CDS attendees' in-tent spending. Local CDS Expenditure Impacts As mentioned in the Methodology Section, CDS's economic activities are represented by their expenditures made in the Los Angeles area. These local expenditure figures were provided by CDS and include those purchases made in the greater Los Angeles area to support the performance, such as temporary staff, equipment rental, accommodations for the performers, rent, construction of the 1550 and RAND parking lots, traffic police and fire services, and fuel and electricity. Local expenditures also include expenditures associated with providing the marketing assistance outlined in the License Agreement. In total, CDS provided $300,000 in assistance. The expenditures associated with. providing in-kind assistance are included in the Operations Expenditures. The other $200,000 provided directly to the PRC and Pacific Park are shown under the Direct Marketing Expenditures category. It should be noted that the above are local expenditures and do not include all CDS costs. - We have not considered corporate CDS costs such as their performer salaries, corporate salaries and expenses. We only consider locally hired jobs. Local Cirque du Soleil Expenditures Operations Expenditures Total Temporary Staff 490,000 Cast and Crew Kitchen (Food) 90,000 Equipment Rental 80,000 Transportation 90,000 Cast and Crew Accomodations 900,000 Facility Operations Expenditures Total Rent 960,000 Construction within 1550 & RAND Lot 670,000 Traffic Police and Fire Services 300,000 Shuttles 200,000 Traffic and Parking Management Plan 110,000 Fuel and Electricity 80,000 Direct Marketine Expenditures Total Marketing Assistance to PRC & Pacific Park 200,000 Total Local Expenditures $4,170,000 Source: Cirque du Soleil, AECOM Additionally, CDS costs for gifts, souvenirs and/or food and beverage sold to CDS attendees are not included here. These are accounted for in the visitor in-tent spending impacts. Page 30 - -~®~ Gross Economic Impacts » Dirs Onsite Direct Impacts Local CDS Expenditure Impacts (Cont.) W toll ~~ 4'.~ ill ~~J~~ ~~ ~ ~~-. ct Impacts Total direct impacts of the CDS operations are $4.2 million earnings are approximately $500,000, which equates to approximately 12 (annual) jobs*. Visitor In-Tent Spending Impacts • Visitor In-Tent Spending evaluates the revenues generated by CDS attendee spending while in the CDS tent. This includes both spending on CDS food and beverage or gift items, as well as any spending for 3rd party food and drink items. • CDS sold-184,000 tickets to "KOOZA" in Santa Monica, we estimate that 95 percent of ticket holders, 181,000, attended the show. • Per capita in-tent spending was established using the survey data performed by LSC. These per capita figures were then applied to CDS attendees to derive total visitor in-spending figures. • In the first table, food and beverage spending is reduced to account for only the net new portion of spending for Santa Monica residents (who may have purchased food and beverage within the city of Santa Monica if CDS was not present): • Adjustments were also made to the gift/souvenir purchases to account solely for the retail outlet portion (retail margins) as described in the methodology section. Cirque du Soleil In-Tent Visitor Spending Sales Per Ciraueln-Tent Sales Attendee Total Adjusted Food and Beverage Spending $9.07 1,510,887 Gift & Souvenir Spending $9.35 1,697,006 Total $18.45 $3,207,893 Cirque du Soleil In-Tent Visitor Spending Ciraueln-Tent Sales Directlmpact Adjusted Food and Beverage Spending 1,510,887 Gift & Souvenir Spending Retail Margin @ 35% 593,952 Imparts $2,104,839 Source: AECOM * The number of local jobs number is estimated from IMPLAN data and was not provided by CDS. It represents jobs on an annual basis. For example, if a typical job in the. performance industry lasts 6 months full time, but CDS was held for approximately 2 months. Than 3 CDS jobs would equate to one annual job in the performance industry. Non-annualized jobs is likely to be a higher figure. A ~.,/'~®~I Page 31 ` /DI i ~ ((fitt Gross Economic Impacts» Direct Impacts Onsite Direct Impacts Visitor In-Tent Spending Impacts (Cont.) • With these adjustments, direct impacts from visitor in-tent spending were $2.1 million in output. Based on this output, direct earnings are calculated at $770,000, supporting 31 direct jobs. Onsite Direct Impacts • The 2009 performance run of CDS's "KOOZA" resulted in total onsite direct impacts of $6.3 million in output, which includes $1.3 million in earnings, and supports 42 jobs. Page 32 ~®~ Cirque Expenditures $4,170,000 $490,000 12 In-TentVisitdr Spending :$2,100,000. $770;000 31 Total Direct Impact $6,270,000 $1,260,000 42 Source: AECOM ul / ~/ ~~ ~...'!e Gross Economic Impacts » Direct Impacts Offsite Direct Impacts • Offsite direct impacts are derived from CDS attendee spending outside of the CDS tent, but still within Santa Monica. This includes: 1. Spending at Pacific Park and the Pier; 2. Spending in Santa Monica (not including the Pier); and 3. Parking Spending (which was excluded from the above). • The analysis specifically accounts for visitors who were attracted to the Santa Monica area by CDS, so we utilize the per capita spending data for visitors whose main purpose is CDS and this is applied to the estimated number of visitors whose main purpose is CDS and went to Santa Monica, and, in the case of Pier visitor spending, who also visited the Pier. • AECOM estimates that 156,000 visitors were induced to Santa Monica for the main purpose of attending CDS. Of these visitors who came to Santa Moriica for CDS, 40,000 also visited the Pier during their trip. OFFSITE VISITOR ASSUMPTIONS Survey Visitors to Cirque .1,309 Survey Visitors Whose Main Purpose was Cirque Survey Visitors Whose Main Purpose was Cirque and are Residents of Santa Monica Survey Visitors Whose Main Purpose was Cirque and Visited the Pier Estimated Share of Cirque Visitors Induced to Santa Monica by Cirque Estimated Share of Cirque Visitors who also went to the Pier Estimated Share of Cirque Visitors who are Residents of Santa Monica Total Estimated Cirque Attendees Estimated Share of Cirque Visitors induced to Santa Monica by Cirque Estimated Attendees induced by Cirque Total Estimated Cirque Attendees Estimated share of Cirque visitorswho also wentto the Pier Estimated Attendees induced by Cirque and who went to the Pier or Pacific Park 1,131 225 279 86% 21% 19.9% 181,000 86.0% 155,660 181,000 21% 38,010 Source: Cirque and PierSurvey (LSC), AECOM a=coM ., _ ,. _ ; e~~ .... J E.l ! i J LI L'e}~l'..:v~'i,~. ~ ~yti'~~I~ lv{ J }"~ ~...J ~ ~.:'J Gross Economic Impacts » Direct Impacts Offsite ®irect Impacts CDS visitors are estimated to have spent almost $4.6 million in various outlets throughout the city of Santa Monica between October and December 2009. • CDS visitors are estimated to have spent $790,000 along the Pier. - $430,000 was spent at Pacific Park, primarily in food and beverages. - $360,000 was spent at the Pier outside of Pacific Park, with most of the spending in food and beverage spending*. • CDS visitors spent another $3.5 million in the city of Santa Monica, excluding Pier spending. Most of the spending was primarily in Food and Beverages, with overnight lodging as the second largest category. • CDS visitors spent approximately $340,000 for parking. • It should be noted that several categories were reduced to account for net new Santa Monica resident spending. *Survey spending data also included a Pier spending category called admission tickets that totaled approximately $7.50 per capita. This was excluded from the economic analysis because we believe some survey respondents may have reported their CDS admission tickets in this category. OFFSITE IMPACTS Spending at the Pier&PacificPark Cirque Visitor Spending at Pacific Park Per Ca 1 Total Adjusted Food and Beverage 8.88 310,487 Rides and Arcade Games 1.61 61,238 Gifts and Souvenirs 1.66 62,998 Subtotal Spending at Pacific Park $434,723 CirgueVisitarSpendingatthePierOutsideofPacificPark Per Ca 1 Total Adjusted Food and BeverageZ 8.40 293,804 Gifts and Souvenirs 0.96 36,602 Other Spending 0.75 28,683 Subtotal5pending atthe Pier Outside of Pacific Park $359,090 Total Pier and Pacific Park Spending $793,813 Spending in Other Parts of Santa Monica Cirque Visitors Spending in Santa Monica Per Cap lSh Total Adjusted Food and Beverage 18.40 2,635,893 Overnight Lodging in Santa Monica 2.70 420,135 Gifts/ Souvenirs/ Other Shopping Items 1.61 250,786 Adjusted Transportation Costs (Gas, Fares, etc)= 1.20 171,791 Adjusted Movie, Clubs, or Other Entertainmentz 0.10 13,929 Total Spending in Other Parts of Santa Monica $3,492,536 Parking Revenues Ciraue Visitors'Parkine Spending Per Ca 1 Avg. Parking Spending 2.21 343,959 Total Spending on Parking by Induced Cirque Visitors $343,959 TOTAL VISITOR SPENDING $4,630,308 and Pier Survey Results Adjusted to account for net spending of Santa Monica Residents. Estimates that 40 percent of Santa Monica Residents would have dined out, utilzied transportation, orpurchased entertainment activities in the city of Santa Monica with or without Cirque. Source: Cirque and Pier Survey (LSC), AECOM i r i f v _._., ~ . 4 ~ ~w ill I7 ~ I ~.~~ t~,~ ~~l i'; ~~~ I i ~ 1.,r ~ ~`; /j c J ? ~l'/ Gross Economic Impacts » Direct Impacts • The figure below reflects Cirque visitor spending estimates along the Pier and in Santa Monica (excluding the Pier). This does not account for any displacement of non-Cirque related sales. Santa Monica Revenues Generated by Cirque Attendees Food and Beverage Santa Monica Accomodations Parking Gifts, Souvenirs, and Other Retail Rides, Arcade Games, & Other Entertainment Source: AECOM Transportation /r'rriwi~®/ S ~ . , ... ~., J .. ~''~. ... 4v ~ ~iy'r~l i ~..~ l'..'~l ~_.+ i. ~J-~ u~ J l'a ~ ~ ~t~~ ~ 7 .u cW} Gross Economic Impacts» Direct Impacts. Offsite Direct Impacts • As described in the Methodology section, ® ~ projected retail spending was adjusted downward fr ~~~ ~~`~ ~~~~~~ ~x e e` ~~+~ ,~- s to conservatively account for only the retail outlet _ ~`~ ~~` ~" Pier & Pacific Park `°"~ $710,000 $260,000 . 11 portion located in Santa Monica, the retail margin. Santa Monica $3,330,000 $1,210,000 47 • After these adjustments, visitor offsite spending Parking $320,000 $110,000 1 have a direct output impact of $4.4 million. This Total Direct Impacts $4,380,000 $1,570,000 59 includes earnings impacts of $1.6 million which support 59 jobs. source: Economics at AECOM Page 36 ~~®~ . _ ._ ~..,~ ::! _y .., ~ t..l ~ ~ ~ i i~ i'..`a ~.~ ~. ..f"e...irl i vr. ~ L'1 `~ ~ 1 .'.~ %.~+ Gross Economic Impacts » Total Impacts • Total Impacts represent the direct impacts from the CDS's operations and CDS visitor spending plus the additional impacts in the city of Santa Monica from purchases made by businesses supplying goods and services to the CDS or its visitors. • Multipliers are applied to the City of Santa Monica CDS expenditures and visitor spending for each category to estimate the total gross impacts. orlSlt@ In1t)aCtS Total Onsite Impacts • CDS generated aone-time total impact of $11.1 million in output in the City of Santa Monica economy in 2009. • This output includes approximately $3.1 million in earnings and support 86 (annual) jobs. Cirque Expenditures $4,170,000 $3,970,000 $8,140,000 In-Tent Visitor Spending $2,100,000 $820,000 _$2,920,000 Total Output $6,270,000. $4,780,000 $11,060;000 Cirque Expenditures $490,000 $1,500,000 $1,990,000 In-Tent Visitor Spending $770,000 $290,000 -;$1,060;000. Total Earnings $1,260,000 $1,780,000 $3,050,000 Cirque Expenditures 12 39 50 In-Tent Visitor Spending 31 5 36 Total Employment 42 44 86 *Sums may not add due to rounding. Source: AECOM Page 37 - -~'"""" .-., r~ ~ I~ r~l w ,~~ G=am,,, .' ~ .. ... , .r ;._ i .. l .. a ~l ~ ~. ~ ~ ! .1 '~ l1~ ~l `.., l~ J"'~a ~ ~ w ~ 3 C' Y ~..`.,.! > ~..> Gross Economic Impacts » Total Impacts Offsite Impacts Total Offsite Impacts • The offsite spending of CDS attendees generated a total of $6.1 million in output in the city of Santa Monica. • This included, approximately $2.2 million in earnings, which support 70 (annual) jobs. Pier& Pacific Park $710,000 $280;000 $990,000 Santa Monica $3,330;000 $1,300;000 .$4,630,000` Parking $340,000, $170,000 $520,000 Total Output $4,380,000 $1,75Q000 .$6,140,000" Pier& Pacific Park $260;000 $100,000 $360,000 Santa Monica $1,210,000 $460,000 $1,660;000 Parking $110,000 $60,000 $180,000 Total Earnings $1,570;000 $620,000 $2,200,000, Pier&PacificPark 11 2 13 Santa Monica 47 9 56 Parl<i ng Total Employment Source: Economics at AECOM Page 38 1 1 2 59 11 70 I Grass Economic Impacts » Total Impacts Total Onsite and Offsite Impacts Overall, the 2009 run of Cirque du Soleil's "KOOZA" is estimated to have generated gross impacts of $17.2 million in the Santa Monica economy. • This includes $5.3 million in earnings within the city of Santa Monica, supporting approximately 156 jobs. Qnsite Cirque Impacts $31.1 $ 3.1 86 Offsite Pier & Santa Monica Impacts $B.1 $ 2.2 70 Total Gross Impacts to the City of Santa Monica $17.2 $ 5.3 156 Source: AECOM Page 39 " '-~o" " i ~ i i , ~ r~~ ~ ; ~, ~ ~~~'; Displacement in Baseline Economic Activities » As described in the Methodology section in Appendix II, AECOM utilized Pier revenue information provided by the City of Santa Monica to quantify the potential displacement in non-CDS related. economic activity along the Pier due to CDS's operations. • The consulting team also gathered input from pier lessees. Their feedback is considered in the economic analysis and discussed in this section. Pier Revenues • In aggregate, the businesses located at the Pier made approximately $40 million in 2009. Between 2008 and 2009, Pier revenues. increased by 4 percent. The growth in business is quite a success in an economy where annual GDP reduced by 2.5 percent during the same period. - As described in a recent Los Angeles Time article and well known in the recreation industry, local attractions, such as seaside piers, often have improved performance during economic downturns as visitors will: (1) take advantage of the free admission of local attractions relative to the high admission fees at standard theme parks; and (2) forego long- distance trips for closer day trips that do not require accommodation spending. Annual (year over year) trends provide a context for Pier revenue performance, but are not, alone, indicative of any changes in performance due to CDS as there may be several reasons for improved or reduced performance across a year. Total Pier Revenues Year Total Revenues 2005 $24,000,000 2006 $33,200,000 2007. $34,800,000 2008 $38,000,000 2DD9 $39,500,000 Source: City of Santa Monica, AECOM Page 40 ~~®~ J ~ 1.., ~ ,; _ ., v! i, u ~ ~ ~;,~ (':'i ~ ~,\"C, L ! 6.x,`1 L ~'7 ~/ t~ i .. Displacement in Baseline Economic Activities » Revenue Index (Aggregate Pier) • AECOM created a monthly revenue index based off the Pier data. As described in the Methodology section in Appendix II, the revenue index demonstrates the monthly revenue variation from the annual average. Pier Revenue Index 120°k 100`AS 80YS GO% . , _ 2005 A095 _ _ ... : -~200G -x•2007 20~.Yi -03-2006 0'M -V-.2009 -20% -~0°/a -60% - - - ~ --- - --- f ` ~~ ~~: lan Feb var41~~ April May lone lily Aug Sep t fdov Dec Source: AECOM • As shown in the chart, the index presents the typical seasonality of the Pier across the last five years. July is the peak revenue month along the Pier. April; May and September are average revenue months, while June through August generate revenues 30 fo 80 percent above the monthly annual average. • As presented, there is typically a steep drop in revenues in October, with October through December performing 30 to 40 percent below the annual average. • Through the months of the CDS occupation, September through December of 2009, the index shows about average performance in 2009 relative to the other years in the months of September and December, while October 2009 is slightly higher than other years and November 2009 is marginally lower than others. Page 41 ~~O" " ' 1, _ {, .. w ~ Displacement in Baseline Economic Activities » Net Change in Pier Activities • Comparing 2009's performance to the average performance of 2005 through 2008, we estimate the difference in the Pier's performance between September and December. - This was calculated by comparing the monthly percentage difference in September - December to the average of the monthly percentage differential in 2005 - 2008. As demonstrated in the figure below, the difference between 2009's performance and the 2005-2008 average represent the net impacts of CDS. - The percentage differential is applied to the annual monthly average to determine the net impacts of CDS on the Pier. - Across the CDS occupation period, September -December, there was a net increase of $420,000. This represents 3.2 percent of total revenues across the four month period. ESTIMATED NET CHANGE IN PIER ACTIVITIES Total Pier Cirque Yearto Increase/ Non-Cirque Year (Reduction) Period Differential Estimate September 3% $91,128 October 10% $342,298 November -2% ($69,839) December 2% $55,127 Total Cirque Occupation 3% $418,713 ESTIMATED NET INCREASE (REDUCTION) IN ACTIVITIES AT THE PIER $418,713 Source: AECOM Page 42 - -~®_ _ 1 A 1y ~ (~ .. .~~ ..,i _. u~,~.. ~J*/ ! ~ ~~I~ ~~;~.l~'~~ ~ w~i~ull ~i l.vw~~~~~`~'~~tJ W Displacement in Baseline Economic Activities » Change in Non-CDS Pier Activity • The revenues we evaluate include CDS attendee's visitor spending and so this figure we estimated above represents the net change due to CDS. • To calculate the amount of non-CDS related activities displaced by the CDS, we must subtract the CDS Attendees' Visitor Spending, from the net change due to CDS. - The CDS generated a positive net impact to the Pier of $420,000. Given that CDS attendees spent $790,000 at the Pier, an estimated $380,000 of non-CDS related economic activity was displaced during the CDS presence at the Pier. ESTIMATED DISPLACEMENTIN BASELINE PIER ACTIVITY Total Pier (1) Estimated Net Change in Pier Activity Due to Cirque $418,713 (2) CirqueAttendees'Visitor5pending -$793,813 (3) Estimated Displacement of Pier Activity Due to Cirque -$375,100 Source: AECOM Page 43 - -~®~ ~. .., ~ . ~ c,,, ,; , , ,, ,,, ,,~ w ~ _ ..~ ~ ~ ~ .1~7.) ~ ~ i~ !f 5 { J`?~ J ~ ~ t,:w ~i ~\'~r `a it ~, Displacement in Baseline Economic Activities » Aggregate Pier vs. Specific Businesses • The analysis finds that overall CDS has a positive direct impact of approximately $420,000 on the Pier across the September -December 2009 period. • The economic analysis reviews the Pier net. impacts on an aggregate basis. However, businesses along the Pier have been impacted differently by the presence of the CDS. • As shown in the table "Pier Revenues Generated by CDS Attendees" on page 34, CDS attendees made 60 to 70 percent of their purchases in the food and beverage category (to a variety of outlets). CDS attendees made entertainment and retail purchases as well, but these purchases may not account for reductions in economic activity due to the CDS's presence at the 1550 Lot. • Pier revenue data was also made available by industry category, entertainment, restaurants, and other businesses. The following slides present the revenue indices and overall net impact for the retail and entertainment categories. Page 44 - -~®~ i~ - Potential Reduction in Economic Activities » Entertainment and Restaurant Performance • As shown by the revenue variation index for entertainment businesses along the Pier, performance was close, but below average in September through December 2009 compared to the other years. - Entertainment businesses along the pier had a t percent revenue reduction during the period of CDS than they would have otherwise. - It should be noted that even within these categories, CDS's impacts varied. For instance, one of the largest entertainment businesses along the pier provided us with their 2005 and 2009 revenue figures. Using the same methodology, we estimated they had a 2 percent reduction their September through December 2009 activities relative to their average performance during that period. Restaurants, on the other hand, performed well above average during CDS's presence, compared to other years. - It should be noted that ih November and December 2005, the only months higher than November and December 2009, the restaurant Bubba Gumps opened (skewing the November and .December 2005 index points). - Not including 2005, restaurants performed 9 percent better during the period of GDS than they would have otherwise. Entertainment Revenue Index xao~: > 1 #-2005 ---~200G -a-zoo~ -m-zooe ~-2009 -899a zoa~ -- -- - - - no~ - ----- ------- - so9s -- GOti _ . ao9a - ----- -- - - ~ zo~ -- - _ ' '~ , osu , _ .__ --~- - ~r ---,--,--, 2055 - -laa_.__._F.nb_ _ rdii~A -. y____Jwt~.___JUIV__.__Aug_ .Dct___ Nnv_Dec__ /_ -__ ao9s o° _ _ G09o ---__ .__-_ Pier Restaurant Revehue Index sos~ f--2005 ----.-2006 ~ ->G-xao2 --zoos -i--2009 -G09o - --____- _ GO`Yc . -_ __-_.__.--________. _- aoa~ ~ ----- - - f ~ y 20'm` -_ - _-__ - __ ~ _ --, ~~-, i, -.r,y. o9e -- - ~ ~ ~ , . , ~ lan Feb, . arch April It4aY Jmie luly Aug 5eP L~ Nov Dec 20~ ._~~-_. - aona . Source: AECOM M Page 45 ~~~" " " r ,, ~ ,, , r I ~G; . , __.. ' ' .~ wl Pier Lessee Input » Overview The previous section quantifies the net impact to the Pier and to key industry categories, but, as described previous, the analysis may not fully reflect the impacts to individual businesses within each category. To better understand the perspective of individual businesses, AECOM and LSC garnered qualitative input from various Pier lessees. - The study methodology was presented to Pier lessees during a Pier Lessee Association meeting and this was supplemented with individual meetings with four major lessees and written feedback from various tenants. • The following section synthesizes the Pier lessee impact input under a few major themes. Page 46 ~®~ Pier Lessee Input » Business Performance Pier Lessees Report on their Performance During CDS Operations • One of the major entertainment businesses along the Pier believes they were substantially negatively impacted by CDS and the loss of a portion of the 1550 Lot. They described a reduction in their general admission business as well reduction in special events. - The 1550 Lot is where staging takes place for film crews and is where groups with special events often park. They described that filming and special events were down across the board due to the economy, but reported that one group event was cancelled as a direct result of CDS, and they were concerned that other event/film organizers did not even try to contact them due to the CDS performance. - This Pier tenant recognized that CDS brought a lot of visitors to the Pier. During the event they described seeing crowds on the beginning of the Pier, but they did not see many visitors moving beyond Bubba Gumps. • Another entertainment business felt like they may have benefited from the show, but felt like they had slightly depressed business during that time period. Another entertainment business believed they had one of the worst years in their history on the Pier. One of the cultural attractions along the Pier had anticipated increases in revenue and attendance through 2009, but instead estimated they had a loss of $5,000 due to the CDS's location in the 1550 Parking Lot. - They reported that their our weekends were hit hard with an average 35 percent decrease of visitors on Saturdays and a 20 percent decrease on Sundays. They also recorded a large decline on Thursdays, when visitorship was down by 36 percent. Page 47 ~ -'~~"'" . ,. .v_: t:: ~,~.. 'J+.J .'. Iii ~.: ~~'~~,41, j~\2\~~~d ~~J'J ..~JJ~.'J Pier Lessee Inpfit» Business Performance Pier Lessees Report on their Performance Durina CDS Operations (Cont.) • A souvenir shop said they did not make a lot of money during that period, but that the CDS operation did .not substantially hurt them. As quantified in the previous section, on aggregate, restaurants had higher revenues than normal during the CDS period. However, this impact differed among the individual restaurants. - One restaurant described capturing a higher than average number of patrons and revenues, but less than anticipated. The business opened for special hours for CDS attendees and despite some increase in volume they believe they had a profit loss of approximately $10,000 due to CDS. • This same restaurant saw a marked decrease in visitation of regular customers coming to see bands due to the limited parking. One restaurant had a significant revenue jump that they believe was directly due from the CDS presence at the Pier - This restaurant "would love to see CDS Come back and visit as often as possible". They believe it is a great opportunity for Southern California clientele to come and spend money in Santa Monica and at the Pier. • This restaurant witnessed more people on the Pier during this time of the year than they had since they opened. - This restaurant reported that their Santa Monica restaurant performed significantly better during the CDS time period than other stores throughout the country. - According to this restaurant they captured the benefit of CDS by staffing up at critical times and staying open later than normal. During the CDS period they added 65 to 75 more employees above their average number of employees during the winter period. They did not participate in any special offers, promotions, or marketing, but still captured a substantial number of CDS visitors. - This business said the CDS hours also worked well because they were off-peak and could be accommodated in their restaurant without displacing regular customers. Page 48 _ -~®~ " - Pier Lessee lnput» Parking Concerns Parking Concerns • While the results of the survey completed for this study did not find that Pier visitors reported parking as a significant problem, Pier lessees had major concerns with parking. Pier lessees identified parking, and the occupation of the 1550 Lot, as the largest issue surrounding CDS. - Mentioned previously, one business described how the loss of the 1550 Lot was especially difficult for their evening customers. • Nightlife customers often park at 1550 Lot because it is convenient; typically there is plenty of parking in the 1550 Lot at night (after the beach goers leave for the day) and the Pier Lot often fills up quickly: • Some bands did not want to play at the restaurant because parking was difficult. They usually park in the1550 Lot. - Another business described how parking is a central issue at the Pier for all events. They recognized that events can be good for Pier business, but anytime there is a large event at the Pier parking is an issue. - As described above, special event and group bookings are particularly impacted by the occupation of the 1550 Lot. Page 49 - '~®"' " " Pier Lessee Input » Visitor Attraction and Press CDS allows the Pier to Capture a Different Demographic One restaurant found that many of the CDS customers were local (within 50 miles of the Pier) and that many were from Santa Monica, but had not been to the Pier in years. - CDS was an opportunity to capture and attract local Santa Monica residents who had not been to the Pier in a long time because they had a perception of the Pier as a tourist trap. - This restaurant found that these Southern California locals have come back after CDS. CDS as Positive Press for the Santa Monica Pier • The restaurant who reported increased revenues thought it was important to recognize that CDS is an iconic cultural event that only comes to a few cities in America. The fact that CDS comes to the Pier says good things about Santa Monica and puts the City in the limelight. Santa Monica gets introduced to different markets and CDS represents an opportunity to present what the city has to offer to newvisitors. - CDS ran numerous advertisements on the radio and in print that always mentioned CDS, at the Santa Monica Pier. • Another Pier lessee mentioned that they understood about businesses concerns about damages of business during CDS, but that, on the big picture level, CDS was an opportunity to capture additional visitors. They believed there would be positive returns in the long run. - They described how CDS attendees love the CDS and it is advantageous, across the long term, for visitors to connect the Pier with positive experiences/events. Page 50 ~~®~ Pier Lessee Input» Marketing Marketina • Several Pier lessees mentioned they were disappointed in the results of attempts to market with CDS. - One particular lessee put a lot of effort toward creating a proposal for catering within the CDS tent and was disappointed that CDS selected anon-Santa Monica business that had a connection with CDS management. They recognized the City's agreement wifih CDS only had a preference for using local businesses, but would have liked if the City was better able to enforce the agreement with CDS. - Another entertainment business mentioned receiving unsolicited marketing support from CDS that involved a lot of planning, but did not result in the expected. outcomes and few purchases. A couple of lessees mentioned concerns with the CVB's citywide CDS promotions • Restaurants in Santa Monica were able to buy CDS tickets at discount rates and were able to offer CDS ticket and restaurant packages. While this was an option to all businesses it was difficult for smaller restaurants to take part in the opportunifiy given fihe risk and cost. • In addition, the website CVB's had two links for CDS attendees, one to restaurants offering free parking and restaurants who did not, the pier lessees mentioned this as a reason why some CDS attendants might be attracted away from the Pier, • One restaurant believed that some of the lackluster capture of CDS attendees in 2009 relative to more capture in the 1990's was, in part, due to the citywide CDS promotions. Some businesses provided future marketing ideas if CDS was again at the Pier: - Have CDS performers in costume/on stilts along the Pier fio draw people before or after the show or when CDS is not playing. Performers can be available for pictures at the end of the Pier and Pacific Park and may be able to encourage people to CDS attendees along the whole Pier. - Additional booths selling items and/or tickets on the Pier. - The City/PRC/Other Pier businesses should market during the period to Pier businesses' regular. customers to let them know that they are still open and where parking is available. Page 51 ~~~"' - 1 Pier Lessee Input » Impact of V ath ~uW a .>~.3~ arious Events Different Events along the Pier have Different Impacts • In 2009 the Pier had over 20 different series and events, including weekly summer dance series and other concert series. Listed are just a few examples: • 100tH Anniversary of the Pier • 25tH anniversary of the Twilight Dance Series • Santa Monica Pier Classic Car Show • Santa Monica Classic 5K/10K • Several Pier lessees commented that different events have varying impacts on each business. Some events are positive for the Pier, while others are not. - Several Pier lessees, from restaurants to entertainment, said that Ashes and Snow was a advantageous to their business. • This show had a low admission fee and did not offer food or drink. • Visitors were able to make their own schedule and it was easy/convenient for them to visit their Pier • One tenant described how they recognized that various tenants profited from different events. Filming events did not have a positive impact at their souvenir shop and often did not have a significant impact on the restaurants, as film crews usually have their own catering. However, the tenant recognized that the PR generated by movies and shows filmed at the Pier helped the reputation and attendance of the Pier across the board. Page 52 CS/~1~1 i i i Net Economic Impacts » • Net economic impacts account for both the gross economic impacts due to the CDS and any reduction in economic activities at the Pier due to CDS. - The aggregate reduction in non-CDS economic activity determined in the Displacement in Baseline Economic Activities section was used to calculate this figure. - Multipliers were applied to the reduction in non-CDS economic activity, so as to account for the associated reduction throughout the Santa Monica economy (indirect and induced impacts). - Gross economic impacts were reduced by the total impact of displaced. customers due to CDS. • CDS's 2009 operation of "KOOZA" resulted in a net economic output impact of $16.7 million to the city of Santa Monica. This includes associated earnings of $5.1 million and 151 jobs. Impacts $ 6:1 $ 3.1 86 $ 2.2 70 151 Page 53 - '~'~®"' " - v~~ ~.~~ t ~'~ ~~ ~ -. L / ail tl ~ ..J J ...~ f.. s.~ J .. .. ~ ~ ~.. Overview » Fiscal Benefits • Fiscal benefits are defined as the fiscal revenues to the City of Santa Monica as a result of CDS's "KOOZA" performance. • Benefits indlude the direct revenues to the City, such as ground lease payments, as well as sales, hotel, and utility tax revenues generated by CDS attendees.. Direct Fiscal Benefits from CDS du Soleil The license agreement made between Cirque du Soleil and the City of Santa Monica required Cirque to make certain payments to the City for the rights to occupy a portion of the 1550 Lot. This included revenue neutral payments, such as payments to cover police and fire costs, as well as revenues to compensate the City for the ground lease of the lot. DireM Benefits from Cirque du Soleil Ground Lease Rents Parking Revenues Civic Center Lot Other Parking Revenues Subtotal Parking Revenues $960,000 • In this analysis, we have revenue receipts as well generated by CDS. included the ground lease as the net parking revenues Less Reduction in Parking Revenue in 1550 Lot Subtotal Reduction $16, 600 $327,359 $343,959 -$379,820 -$379,820 The City of Santa Monica received $920,000 from the Direct Fiscal Benefits from Cirque du Soleil $924,139 CDS ground lease and parking revenues.. source: AECOM, City of Santa Monica Page 55 ~`~"'"~ ~. _ c.=". ~ u it ~~ ~~`...:~~ i l~ ~1 ~ i I "~`~,i ft ~ ~~ i 7~~ ~ ~ ~I `~ 4.J c. Overview » Fiscal Benefits Tax Benefits resulting from Ciraue Sales tax receipts are generated to the City of Santa Monica from Cirque attendees spending within the CDS tent, along the Pier and within the rest of Santa Monica. The City of Santa Monica receives 1 percent of taxable sales. Utilizing the revenues generated within the economic impact analysis section, CDS attendees generate a total of $6.2 million in retail sales throughout Santa Monica. • The City of Santa Monica is projected to receive $62,000 in sales tax as a result of CDS. Transient occupancy taxes (TOT) are charged on room revenues for those staying less than 31 days in a hotel or other accommodation. TOT charges in the City of Santa Monica are 14 percent of room revenues. TOT taxes are applied to the estimated revenues for CDS visitors*. The City of Santa Monica is projected to have received approximately $60,000 in TOT as a result of CDS. • Utility User tax is 10 percent in Santa Monica. CDS is estimated to have paid approximately $8,000 in utility user tax to the City of Santa Monica. Onsite Taxable Sales Cirque In-Tent Sales Revenues Taxable Share Taxable Sales Food and Beverage Spending $1,510,887 90% $1,359,798 Gift&SOUVenir Spending $1,697,006 100% $1,697,006 Subtotal Onsite Taxable Sales $3,056,804 Offsite Taxable Sales Pacific Park Adjusted Food and Beverage2 $310,487 90% $279,438 Gifts and Souvenirs $62,998 100% $62,998 Pier Adjusted Food and Beverage2 $293,804 90% $264,424 Gifts and Souvenirs $36,602 100% $36,602 Other Spending $28,683 100% $28,683 Other Parts of Santa Monica Adjusted Food and Beverage2 $2,635,893 85% $2,240,509 Gifts/Souvenirs/Other Shopping Item $250,786 100% $250,786 Subtotal Offsite Taxable Sales $3,163,440 Total Taxable Sales $6,220,244 Sales Tax @ 1% 562202 Transient Occupancy Tax Accomodation Spending Est. Induced Cirque Visitor Accomodation Spending Total Accomodation Spending 420,138 $420,138 Transient Occupancy Tax@14% $58,819 Additional Taxes Utility User Tax Cirque Utility Use Utility User Taxes @10% $80,000 $8,000 *Revenues from CDS performers are excluded because they are Other Tax Receipts $B,ooo likely to have stayed more than 31 days. source: AECOM, city of Santa Monica Page 56 ~_~ ~ ... .~ .,,r L. ~~ .5 ~ luv J .u leJ ., L~~J ~:i 4J ~ U `~ ~ ~ .~ ~~ .'.w~ , ~ ~. ~_._ ~ .,~. ti +~ ~S ~ ~4 Overview » Fiscal Benefits Total Fiscal Benefits In total, the City of Santa Monica is projected to have received approximately $1.1 million in fiscal revenues as a result of Cirque's operations in the City of Santa Monica. DirectBenefit5from Cirque du Soleil $920,000: Tax Benefits Sales Tax Receipts $60,000 Transientbccupancy Tax Receipts :$60,000 Additional Taxes $10,000 Subtotal Tax Benefits $130,000.: Total fiscal Impacts to the City of Santa Monica .$1,050,000 Page 57 /" ~~~Qa r ii iu ~ ~ rvw~ ip~ ~ .:~_ ~ _.!II:! ~ ~~.. v~~ .4~.~ .!i ~~~~.1~~'v!~~~ uJ i~f~/~~wi~JV ~ ~ ,'~ .!..,~...i _I i%/ cJ CDS' 2009 operation of "KOOZA" resulted in a net economic output impact of $16.7 million to the city of Santa Monica. This includes associated earnings of $5.1 million and 151 annualized jobs. • In total, the City of Santa. Monica is projected to have received approximately $1.1 million in fiscal revenues as a result of Cirque's 2009 operations in the City of Santa Monica. Gross Impacts $17:2 $ 5.3 15E Displaced'Salesl -$;5 -$.2 -° Net Economic Impact $16.7 $ 5.1 15S Direct Benefits from Cirque $920,000'. Tax Benefits $130;000-' Total Fiscal Impacts $1,050,006 Source: AECOM Page 58 - -" `~~ 1 Y^ 1 ~ ~ Every reasonable effort has been made to ensure that the data contained in this report are accurate as of the date of this study; however, factors exist that are outside the control of AECOM and that may affect the estimates and/or projections noted herein. This study is based on estimates, assumptions and other information developed by AECOM from its independent research effort, general knowledge of the industry, and information provided by and consultations with the client and the client's representatives. No responsibility is assumed for inaccuracies in reporting by the client, the client's agent and representatives, or any other data source used in preparing or presenting this study. This report is based on information that was current as of April 2010 and AECOM has not undertaken any update of its research effort since such date. Because future events and circumstances, many of which are not known as of the date of this study, may affect the estimates contained therein, no warranty or representation is made by AECOM that any of the projected values or results contained in this study will actually be achieved. Possession of this study does not carry with it the right of publication thereof or to use the name of "AECOM" or "Economics Research Associates" in any manner without first obtaining the prior written consent of AECOM. No abstracting, excerpting or summarization of this study may be made without first obtaining the prior written consent of AECOM. Further, AECOM has served solely in the capacity of consultant and has not rendered any expert opinions. This report is not to be used in conjunction with any public or private offering of securities, debt, equity, or other similar purpose where it may be relied upon to any degree by any person other than the client, nor is any third party entitled to rely upon this report, without first obtaining the prior written consent of AECOM. This study may not be used for purposes other than that for which it is prepared or for which prior written consent has first been obtained from AECOM. Any changes made to the study, or any use of the study not specifically prescribed under agreement between the parties or otherwise expressly approved by AECOM, shall be at the sole risk of the party making such changes or adopting such use. This study is qualified in its entirety by, and should be considered in light of, these limitations, conditions and considerations. Page 59 - -~~' " " .. t', ,~. , _ _... `,' Addendum- Cirque du Soleil Economic Impact /"i•r~O~ October 11, 2010 As part of the analysis process, AECOM circulated a draft of the analysis report, the Econom__ic Impact of Ciroue du Soleil on the Citv of Santa Monica, and attended a Pier Restoration Corporation (PRC) Board meeting. This addendum summarizes additional comments and inputs. Impact due to the Timing of the Event • No Dff Peak Period for the Pier - It was suggested that there is no off peak period for the Pier, i.e. that a weekday in the summer performs just as well as a weekend in January and that the visitation is often based more on weather than time of the year. • Impact of Timed Events o Timed events, such as Cirque du Soleil (CDS), create traffic impacts before and after events which discourage people from coming to the Pier. o Several suggest that timed events have a detrimental impact to the Pier as compared to more open ended events. Cirque du Soleil Specific Comments • One of the Pier businesses, who was selected to be a vendor within the CDS Tent commented, on .how he believed the concept of Cirque du Soleil was good for the Pier as a Southern California destination. • A resident commented that they did not feel that events such as CDS improve their quality of life. • Parking Survey Findings. A few Pier businesses mentioned that the finding that only 4 percent of Pier visitors indicated they usually park in the 1550 Lot and were displaced due to CDS seemed incorrect. They believe the figure was higher. • Cirque's Compensation to the City -The amount of money Cirque pays the -City to perform in Santa Monica was questioned. Is the amount appropriate or too low? • Impact to Whom? -The report finds that CDS' performance of KOOZA in Santa Monica positively impacted both the Pier and the City of Santa Monica, but that the distribution of positive and negative impacts varied by business type, with restaurants faring positively and entertainment perhaps having some negative impacts. At the meeting, it was suggested that only one restaurant along the Pier benefited from the presence of Cirque. Analysis/Methodology Comments • Survey Sample. The survey was completed in two parts. Lauren Schlau Consulting (LSC) surveyed persons at two locations on the Pier and then, due to the disbursal patterns of Cirque attendees, decided to survey the Cirque attendees online. 1 Addendum- Cirque du Soleil Economic Impact Questions were raised on the size of the survey sample and whether it was an appropriate selection. o Both the in person survey and online survey had an acceptable sample size. Over 1,200 Cirque patrons answered the online sample and 300 persons completed the onsite survey. The onsite survey had a sample variance of 5.6 percent at the 95 percent confidence level, while the online survey had a 2.8 percent sample variance at the 95 percent confidence level. o Cirque provided the list of emails that were mailed the online survey. This list is supposed to represent all ticket purchasers. who made their emails available. • High Share of Santa Monica Residents. The survey found that almost 20 percent of CDS visitors surveyed were from Santa Monica. Applied across all CDS attendees this assumption works out to almost 36,000 Santa Monica residents visiting CDS, a little more than 40 percent of all of Santa Monica residents. This figure seems high; while Santa Monica residents are the target profile of people who would attend CDS, it is possible that Santa Monica residents answered the survey in greater proportions than other populations. • Santa Monica Residents Impacts. The initial report included the full impact of Santa Monica residents' spending, but the report has been adjusted to account for Santa Monica resident spending that was likely to have happened in the City of Santa Monica if CDS was not present. • Persons who did not visit due to CDS. A number of questions came up about measuring the impacts/surveying those who did not come to the Pier due to CDS. This factor was taken into consideration as AECOM initiated this study. A methodology was developed that was not dependent on measuring who did not come. As described in Appendix II: Economic Impact Methodology, the report is able to instead compare the revenue performance of the Pier without CDS to the Pier performance with CDS, holding for annual and monthly performance. 2