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SR 09-27-2011 3IF aim yo, it Report eport Santa monied City Council Meeting: September 27, 2011 Agenda Item: -:3--1 To: Mayor and City Council From: Andy Agle, Director of Housing and Economic Development Subject: Main Street Festival Lighting System Improvements Recommended Action Staff recommends that the City Council authorize the City Manager to negotiate and execute the First Modification to the Revocable License and Funding Agreement Contract No. 8389 (CCS) with Main Street Business Improvement Association ( MSBIA) for the continued operation of the festival lighting on Main Street in accordance with the terms stated in this report. Executive Summary In 2005, festival lights were installed along both sides of Main Street using $220,000 in grant funds from the City. On October 12, 2004, the City entered into a Revocable License and Funding Agreement with MSBIA to design, install, operate and maintain the festival lights. This Agreement expires on October 12, 2011. In order for MSBIA to continue operating the festival lights, the term for the License Agreement needs to be extended. Staff recommends that the term be extended for 10 years to October 12, 2021, and that the other terms in the existing License and Funding Agreement be updated and modified. Background The MSBIA has administered the operation and maintenance of the festival lights since they were installed in 2005. The festival lights are hung from light poles along both sides of Main Street, between Pico Boulevard to the north and the southern City boundary. On September 28, 2004, the City Council authorized staff to negotiate a Revocable License and Funding Agreement (Contract No. 8389 (CCS) (Original Agreement) that was executed on October 12, 2004. This Agreement granted MSBIA $220,000 to design, install, operate and maintain the festival lighting. Most of the funds from this 1 grant were used to design and install the lights; the on -going operating and maintenance costs were reimbursed to MSBIA from the remaining grant funds until the grant was fully exhausted in 2008. In early 2007, MSBIA recognized that it needed additional funds to continue paying for the festival lights. For FY 2007 -08, the City Council approved a one -time appropriation to MSBIA in the amount of $25,000 to be used for the continued operation and maintenance of the festival lighting on Main Street, $50,000 for a Main Street Assessment Study and $9,600 for additional sidewalk cleaning. On May 27, 2008, the City Council adopted Resolution No. 10294 (CCS), declaring its intention to set the public hearing date on July 22, 2008, to consider the formation of the Main Street Business Area Festoon Lighting and Sidewalk Cleaning Assessment District (the "District "). On July 22, 2008, the City Council conducted a public hearing on the proposed formation of the District, tabulated the ballots and confirmed the formation of the District. The property -based assessment, which generates approximately $88,000 annually, pays for the on -going operation and maintenance associated with the festival lights, as well as supplemental sidewalk cleaning. The City invoices the MSBIA for the utility costs associated with these lights. Discussion The Original Agreement has a seven -year term that expires on October 12, 2011. This First Modification to the Agreement would: 1. Extend the term of the Agreement until October 12, 2021 2. Change the title of the Agreement to "Revocable License Agreement" 3. Restate a requirement that MSBIA will use a licensed electrical contractor, rather than naming the contractor 4. Add a requirement that MSBIA install electrical sub - meters to provide a more accurate accounting of the festival lights' electric usage. 2 The Main Street commercial district benefits from the festival lighting because it enhances the evening atmosphere and the business vitality in this unique retail and restaurant district. MSBIA has used the District assessment funds to replace all of the lights as well as to pay for the on -going electricity and maintenance costs. While continuing to evaluate LED technology as an alternative, MSBIA has determined that, at this time, LED lights do not illuminate as well as the existing incandescent lights and that the lower monthly electricity costs that may be achieved with LED lights do not offset the large investment to acquire LED lights. MSBIA also plans to hire a contractor to install electrical sub - meters so that the electricity costs for the festival lights can be more accurately measured rather than requiring the City to calculate and invoice MSBIA for its share of the electrical costs. On September 1, 2011, the MSBIA Board voted to continue to assume responsibility for maintenance of the festival lighting, subject to Council approval of the First Modification. Financial Impacts & Budget Actions There is no financial impact associated with the First Modification to Contract 8389. Prepared by: Erika Cavicante, Senior Development Analyst Approved: Andy Agle, Director Housing and Econo Forwarded to Council: 3 Rod Gould City Manager Reference Amended Lease No. 8389 (CCS).