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sr-042611-3lCity Council Meeting: Apri126, 2011 Agenda Item: 3L To: Mayor and City Council From: Barbara Stinchfield, Community and Cultural Services Director Subject: License Agreement with Cirque du Soleil for Use of a Portion of the 1550 PCH Parking Lot Recommended Action Staff recommends that the City Council authorize the City Manager to negotiate and execute a proposed License Agreement with Cirque du Soleil for use of a portion of the 1550 PCH parking lot for theatrical performances from January 2 through March 30, 2012. Executive Summary Following the October 25, 2010 Gity Council discussion and adoption of revisions to the 1550 PCH Parking Lot GulturaVEntertainment Event Policy, staff issued a Request for Event Proposals for the 2011-2012 event season. One proposal was received -- from Cirque du Soleil (CDS} for the presentation of a new production, "Ovo. The recommended rental fee to the Beach Fund for the portion of the 1550 lot for the occupation period from January 2 through March 30, 2012 is $981,253, which represents a 30% increase over the per square foot rent paid in 2009. Additional anticipated economic benefits to the City include patron parking revenues at the Civic Center parking structure and 2030 Barnard Way lot, purchase of local supplies and services by CDS for its operation, and collateral spending by CDS visitors in local restaurants and businesses. The overall net impact to the City from the 2009 CDS "Kooza" performance was estimated to be $16.7 million. Background Council first approved a policy to allow commercial events in the 1550 PCH parking lot {1550 lot) on September 1~, 2±,04. The purpose of allowing commercial events is threefold: (1 } to provide much needed revenue to the Beach Fund to support ongoing operations and capital improvements, (2) to meet the community's demand for increased cultural offerings, and {3) to provide economic benefits to the cultural tourism sectors of the community. The policy .has been modified over time to provide greater flexibility in the review process and evaluation criteria, and to incorporate concerns of the Pier Restoration Corporation (PRC) and Pier lessees When CDS returned to the 1550 lot in 2009, a number of concerns were raised by the PRC and Pier lessees about reduced parking availability in the 1550 lot for Pier visitors and the potential negative impacts on Pier businesses. The license agreement included a full range of conditions and mitigations to address these concerns. These mitigations included improving a portion of the North Civic Center lot {1680 Main Street) for public parking, incorporating prepaid discounted parking for CDS patrons with their online ticket purchase at offsite parking Tots, providing a free shuttle service to and from the offsite parking, offering cross promotion opportunities to Pier merchants, and providing direct financial and in-kind partnership support to the PRC for the Pier Centennial. In addition, the Gity Council directed staff to prepare an economic impact analysis to examine the impacts and benefits of GDS. On October 26, 2010 staff reported the results of the economic impact study, prepared by the team of AECOM and Lauren Schlau Consulting, and recommended changes to the commercial events policy in an effort to balance the often competing needs of the PRC and Pier businesses with the revenue needs of the Beach Fund and the community's interest in additional cultural offerings. 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. The study found that GDS generated a net gain in sales to Pier businesses of $420,000, however, the impact on specific types of businesses differed. Entertainment businesses had a 1% reduction in revenues during this period, while restaurants had a 9% increase in revenues although the performance varied among businesses. 2 Staff recommended limiting the period for performance or timed extended events, currently allowed from Labor Day through Memorial Day, to January through mid-March when Pier lessee sales would be the least impacted. The City Council expressed concerns that this narrow window would limit the opportunities for unique, cultural events and sustained the event period from Labor Day through Memorial Day. The Council also directed staff to solicit more widespread community input regarding the time frame and type of events supported 6y the community. Discussion In November 2010, staff issued a Request for Event Proposals (RFP) for the 2011-2012 Event Season, under the Council-approved timeframe between Labor Day and Memorial Day. The RFP was sent to the list of event producers who had expressed an interest in staging an event in the 1550 lot over the past several years and was posted on Planet Bids. Cirque du Solell Proposal Staff received one proposal in response to the RFP. This proposal, from Cirque du Soleil (GDS), is modeled after the successful 2009 performance plan. Highlights of CDS's proposal are as follows: • CDS will present a new production, "Ovo", set in the vibrant world of insects, which will be one of the most family-friendly shows created by CDS. • The Occupation Period was proposed from January 23 to April 13, 2012. Staff recommends an earlier start of January 2 to March 30, 2012 so that the run is completed by the start of spring break in April. CDS supports this change to the Occupation Period. • The Performance Period would be from January 20 to March 25, 2012. The event schedule would be the same as in 2009 with one show per day on Tuesdays through Thursdays, and two shows on Fridays, Saturdays, and Sundays, with an option to add six additional Thursday shows at the discretion of the Cirque. If the LA Marathon returns in March 2012, the schedule will be adjusted to accommodate the Marathon through rescheduling of any conflicting shows. • CDS would occupy the same footprint as in 2009 as shown in Attachment A. Base rent for the portion of the 1550 lot and Deauville site would be $981,253 for 3 the 2.9 month period. This reflects a 30% increase in the per square foot rate from 2009. • CDS would follow the Parking and Traffic Management Plan, prepared, evaluated, and updated by Fehr & Peers during and after the 2009 visit, to the extent conditions are the same. Discussion of changes to parking conditions and additional mitigations are discussed below. • CDS would build on and strengthen prior cross promotions with the PRC, Pier tenants, and Convention and Visitors Bureau (CVB) and integrate special Pier(local partner offers onto the GDS website. CDS is also committed to joint packaging and initiatives with the Santa Monica Pier Lessees' Association {SMPLA) to direct CDS patrons to the Pier before and after the performances. • Sustainability practices would include a recycling program in public areas and employee work space, composting of food residue in the employee cafeteria, replacement of plastic souvenir gift bags with oxi-biodegradable bags, products made with organic cotton and bamboo, booklets printed on 100% recycled paper and CD releases made with compostable product. • CDS would pay all Gity costs and services associated .with the event including but not limited to police services for crowd/traffic control, fire safety officers; event licensinglliaison and location supervision, parking staff, utility charges, sanitation services, and custodial maintenance services. Parking and Traffic Management Plan As indicated above, Fehr and Peers prepared a comprehensive Parking and Traffic Management Plan for CDS for the 2009 visit. Prior to the opening of "Kooza", and each week during the run, an operations committee of City staff, CDS personnel, and PRC representatives met to review and make adjustments to the plan. By the end of the GDS visit, there was agreement the planning effort was successful and provides a solid base for future event planning. Recognizing that certain conditions have changed since 2009, modifications and additional mitigation efforts would be necessary for the 2012 run. GDS occupies 719 spaces in the 1550 lot, which reduces the .normal capacity of 1,173 spaces to 452. In 2009, CDS patrons were directed to prepay for parking at a discounted rate at offsite locations (the Civic Center Parking Structure and the 2030 Barnard Way Lot) which were each served by a free shuttle service to and from the event site. Since 90% of CDS tickets are sold online, patrons received immediate 4 information about parking for the shows and were provided a direct link to purchase the parking online through the City's website. A total of 17,771 parking permits were purchased through this system which ensured that a significant number of CDS patrons used the dedicated lots away from the Pier. An additional mitigation measure in 2009 was the improvement of a portion of the site at 1680 Main Street (Civic Center Lot) by CDS to serve as replacement parking for Pier and beach visitors. The CDS license agreement included the requirement for CDS to remove the temporary parking improvements at this location at the end of the 2009 visit. On October i3, 2009, the City Council directed staff to explore opportunities to extend the use of the site for temporary parking following CDS's departure. On May 25, 2010, the Council approved continuing the use for temporary, special events through spring 2012, when construction of the Palisades Garden Walk was expected to begin. This timing has been revised and as currently envisioned, the 16$0 Main Street lot will no longer be available after September 2011. As excavation begins on the Village portion of the Civic Center property, soil will be transferred to the Palisades Garden Walk site, enabling preparation of the park site to begin at substantial cost savings to the park project. While the removal of the temporary parking lot from use by Pier and. beach visitors and employees presents additional challenges, the 2009 CDS experience provides useful data to address ways to mitigate the loss of this lot from the inventory. The following are among the key findings of the 2009 traffic plan evaluation: ® During the CDS occupation, the highest use of the 1680 Main Street lot was for special event parking when the Pier .parking lot was closed or when a special event was held at Pacific Park. Usage was higher during October and November and dropped off considerably during December. The average number of cars on weekdays was 40, and between 100 and 204 on weekends. ® CDS patrons to the matinee shows were directed to use the 2030 Barnard Way Lot, which has 1,319 spaces. CDS patrons for the evening shows were directed to use the Civic Center Parking Structure, which has 744 spaces. Overall utilization of the Civic Center Parking Structure did not exceed 500 spaces; overall utilization of the 2030 Barnard Way Lot was generally below 1,000 spaces. 5 ® Shuttle service was provided between both the Civic Center Parking Structure and the 2030 Barnard Way Lot beginning three hours before each CDS performance and continued for one hour after the performance ended. e Approximately one half of show patrons utilized the shuttle service to and from the offsite facilities. ® CDS patrons who chose to take advantage of dining and retail opportunities parked in both public and private parking structures downtown. Changes in 2012 Parking Conditions and Proposed Mitigations. As compared to the prior visit by GDS during September through December, the proposed timeframe of January through March is a much slower time of the year for Pier and beach visitors and coincides with the narrower timeframe supported by the PRC and Pier lessees in prior discussions. An analysis of parking usage in the 1550 lot during these months, over the past three years, indicates an average of six days in January and February when utilization exceeds the 452 spaces. and 13 days in March. In 2009, Pier employees who normally park in the 1550 lot were able to park in Structure 8. In addition, Parking Structure 6 accommodated downtown permit parkers who have been transferred to the Civic Center Parking Structure beginning in April 2011. Given these changes to parking in the Civic Center and downtown, the staff recommendation to approve the return is predicated on coordinated management of the overall supply of spaces in the beach lots to the north and south of the Pier, in the Civic Center, and nearby private lots as the means to accommodate visitors, employees, and CDS patrons. A wide range of discussions among City staff, CDS representatives, PRC, Pier lessees, Convention and Visitors Bureau, and the Santa Monica Chamber of Commerce recognize that managing the parking and traffic impacts and ensuring a successful run for CDS will require cooperative and innovative solutions by the City, CDS, and the business community. GDS would comply with the conditions required in 2009, if still applicable, and has agreed to the following additional mitigation measures. CDS would: 6 ® Commit to spending up to $20,000 to update the Parking and Traffic Management plan to address solutions to the changed conditions. ® Aggressively pre-sell parking for CDS patrons and direct them to the Civic Genter Parking Structure for evening performances and to the 2030 Barnard Way lot for matinees. The City's improved online technologies, used during the 2010 and 2011 LA Marathons, will improve the efficiency of the transaction and operation at the Tots. ® Increase the hours of free shuttle operation from the 2030 Barnard Way lot on weekends to extend service to Pier visitors as well as CDS patrons. o Work with the PRC and SMPLA to relocate Pier employees to adjacent beach lots and/or explore arrangements at nearby private lots; one option to address security concerns for late night employees is allow evening employees to park in the 1640 Beach lot (Hot Dog on a Stick lot), which is adjacent to the Pier. e Encourage use of Big Blue Bus through special offers. ® Provide City staff with specific information for directing patrons and visitors to available parking. ® Ensure adequate wayfinding signage. ® Provide a $50,000 Promotion Incentive Grant to SMPLA to assist with promotion of Pier businesses during the GDS run. ® Facilitate and promote packaging. of "Ovo" tickets with dinner or hotel stay that includes parking and transportation. ® Provide financial and in-kind sponsorship to the PRC for the Twilight Dance Series. • Purchase direct advertising at Pacific Park. Review Process anct Public Outreach The Extended Events Review Committee, as set forth in the 1550 Beach Parking Lot CulturaVEntertainment Event Policy, includes staff from all concerned City departments as well as representatives from the Pier Restoration Corporation, Convention and Visitors Bureau, Bayside District Corporation, and Chamber of Commerce. The Committee evaluated the CDS proposal based upon criteria established in the above policy, including the degree to which the event offers a unique cultural or entertainment 7 experience, demonstrates clear measurable economic benefit to the City and local businesses, including Pier lessees, contributes to the Beach Fund, addresses traffic and parking impacts, and minimizes environmental impacts. Based upon the success of the 2009 visit. and the demonstrated commitment of CDS to satisfy all City requirements, the Committee has recommended approval of the proposal. In accordance with the public review process outlined in the 1550 Beach Parking Lot CulturaVEntertainment Event Policy and the direction given to staff by the City Council at its October 26, 2010 meeting, staff solicited input from the Pier Restoration Corporation, SMPLA, and the larger community. The PRC Operations Committee met on February 22, 2011. The Committee discussed its concerns about parking and signage, encouraged use of private lots, and voted to continue review and discussion at the March 3 Board Meeting. It was acknowledged that City staff was still in negotiations with GDS so the main purpose of the March 3 Board discussion would be to gather input. The PRC Board expressed support for the CDS return and acknowledged the value of the partnership. The return is viewed as an opportunity to implement some of the parking management tools that have been discussed, among them the use of private Tots and making that information available on the City's website. In addition, the Board suggested packaging options for Pier merchants, CDS support for the Twilight Dance Series, or other events at the Pier during other times of the year. A community meeting was held on February 28, 2011. The meeting was advertised in the local press and email notices were sent to neighborhood groups, the PRC, SMPLA, Bayside District Corporation, and Convention and Visitors Bureau. Postcards were mailed to over 150 residents and businesses in the area. Fifteen people attended the meeting and an additional 20 people submitted written comments via email. There is widespread support for the return of the CDS among the businesses and residents who participated in the meeting and submitted comments. Most of the discussion at the community meeting focused on parking and the need for CDS, the City and businesses to work to together for solutions. 8 Staff attended the SMPLA meeting on March 3 and presented the CDS offer for the $50,000 Promotion Incentive Grant and asked the SMPLA to develop a proposal on how best to use the funds. The SMPLA voted to support the CDS return at a meeting on April 11 and will continue to meet and discuss options for the use of the incentive grant. The action taken by the PRC at the April 20 Board meeting will be reported verbally at the April 26 City Council meeting. If approved by the City Council, CDS will seek approval from the California Coastal Commission for the event. Environmental Analysis The License Agreement with CDS for use of a portion of the 1550 Lot is categorically exempt from environmental review pursuant to the California Environmental Quality Act {CEQA) Guidelines, Section 15304{e), as these actions constitute minor temporary use of land having negligible effects on the environment. CEQA Guidelines specifically include uses such as carnivals and circuses. Financial Impacts & t3udget Actions Approval of CDS's proposal will generate $981,253 in Special Event revenue to the Beach Fund. A portion of this revenue will offset the estimated loss in parking revenue due to spaces occupied by the CDS in the 1550 Lot. Based on a three-year review of the .parking revenues in the 1550 Lot, the average revenue per space per month has been calculated at $181 for the 2.9 month long occupation period. The estimated total parking revenue loss is $382,301. Therefore, the net additional revenue to the Beach Fund is nearly $600,000, representing a 30% increase over the amount the CDS paid the City in 2009. Reduction in other revenues related to the 1550 Lot, such as staging for filming on the Pier or the beach, is expected to be minimal since alternative staging locations may be provided at the 1640 Appian Way or the 1150 PCH lots. 9 Parking revenues at the 2030 South Beach Lot are projected to increase since this will again be one of the locations to which CDS matinee patrons will be directed with a discount incentive and free shuttle. It is estimated that parking revenues for the Beach Fund will increase by approximately $90,000, similar to the 2009 revenue increase. Likewise, parking revenues to the General Fund for the Civic Center Parking Structure are expected to increase by $60,000, which is the additional amount generated in 2009. If the event is approved by the City Council, the revised revenue projections will be included in the City's FY 2011-13 Budget. Tiie 2009 economic impact study reported $200,000 in sales and transient tax increases to the General Fund. This amount may be somewhat reduced for the 2012 visit since the occupation period is shorter. All direct City staff time and expenses will be reimbursed by CDS to achieve full cast recovery by the City. Prepared by: Judith Meister, Beach Administrator Approved: Forwarded to Council: Barbara Stinchfield Rod Gould Director, Department City Manager Attachment A: Proposed Cirque du Soleil Site Plan 10 Attachment A: Proposed Cirque du Soleil Site Plan AN~JEX 1 - P12EL9MIiVARY SITE PLAN -- - --. SAtdTAA40MlC4PIER 1 _. _.. -~--= -- 6. ~ ~m ~~'( ~ °1 ] ~~~ ~ ~ ~ ~ i{J+ ~ ~ ~ [~~i @ d a- yli / q~ ~ i 'try &~ ~ 9~- ~ °~ ~~~~, ~:t~,~ ~,~ ` / .. I~~ ~~ ~ ~ i ~ ~ ~~>~~ ~~ ~ 3 a ~ ~~ ~~ ; ~~ ~i( ~'~t ~ ~ ~~~ ~gm e~m 'q~ ~~ ~~ ~~~ ~ ~~ I~L ~ ®~ 10 [Type text] Reference Contract No. 9361 (CCS).