sr-112211-4aCity Council Meeting: November 22, 2011
Agenda Item: 4 -A
To: Mayor and City Council
From: Andy Agle, Director of Housing and Economic Development
Subject: Pier Governance, Management and Operations
Recommended Action
Staff recommends that the City Council:
1. Consider modifying the governance structure of the Santa Monica Pier as
recommended in the attached "Pier Governance and Management Study;"
2. Direct staff to return to Council with legislative and budget adjustments
necessary to implement the recommended approach.
Executive Summary
The City of Santa Monica, with the cooperation of the Santa Monica Pier Restoration
Corporation (PRC), initiated a study to evaluate the governance and management of the
Santa Monica Pier in order to identify opportunities to maximize organizational and
budgetary effectiveness.
Following a comprehensive review of City and PRC operations, feedback from
stakeholders, and a review of differing governance and management approaches, the
Santa Monica Pier Governance and Management study provides several
recommendations to enable the City and its nonprofit partner to deliver a more
responsive, transparent, and accountable management of the Pier, and to lay the
organizational groundwork for the upcoming Master Planning effort that will guide the
Pier into the future. Recommendations outlined in the Study call for changes to both the
City's and PRC's roles and responsibilities.
The study identifies a need for the City to take a stronger role in the management of this
major public resource, and recommends the establishment of an on -site Office of Pier
Management that would consolidate and better coordinate the City's many Pier - related
functions. Recommended changes to the PRC include modifying the PRC Board's size
and composition to enhance decision - making while broadening representation, as well
as renaming and refocusing the PRC from an organization whose original mission was
to `restore' the Pier to an organization with a renewed focus on marketing, promotions
and the production of community events. The renamed non - profit corporation would
also help facilitate public participation as part of the upcoming Pier Master Planning
efforts and other Pier policy matters for Council's consideration.
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The recommendations are designed as an interim measure for a period of
approximately two years to enable the City to evaluate improvements in operational and
fiscal outcomes and consider further modifications, if needed.
Background
In January 2011, the PRC Board commissioned a study by Urban Place Consulting
Group, Inc. The study, "Managing Our Public Spaces," compared management models
employed by other public venues. The study raised many questions about best
practices for management of the Pier and recommended further analysis. As a result,
City staff conducted a review of pier operations provided by both the City and the PRC,
in order to assess the existing governance structure and management functions, and to
develop recommendations that would achieve an improvement in operational
efficiencies and transparency, reduce General Fund operating subsidies, and provide a
springboard for the future Master Planning process for the Pier.
Discussion
An examination of the current governance, management and operations of the Pier is
necessary for several reasons, including:
• In 2009, the Pier celebrated its Centennial, which provided an opportunity to
consider the next 100 years on the Pier.
• It has been 28 years since the disaster that created the need to restore the Pier
and create the SMPRC. By all accounts, the Pier has been effectively restored,
creating an opportunity to examine the mission and functions of the oversight
organization.
• The long- serving PRC Executive Director resigned in 2010, creating an
opportunity to consider the needs and direction of the Pier and the organization
that oversees the Pier. The type of organization the PRC may become will have
a direct bearing on the experience and skills the PRC will want in its new
Executive Director and should be resolved prior to the hiring of a new Executive
Director.
• Staff has proposed including a Pier Master Plan in the City's FY 2012 -13 Capital
Improvement Budget which will require extensive public input.
• As the City evaluates the Pier's economic forecast and projected structural
budget deficit, it is critical that the City consider opportunities to reduce and
potentially eliminate operating and capital subsidies for the Pier.
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• The large size of the PRC Board is cumbersome and could operate more
efficiently if reduced in size. In addition, conflicts about the appropriate role of
the PRC and the City in tenant leasing needed to be resolved.
The report examined four components:
(1) Organizational and management analysis of the Pier's existing operations;
(2) Assessment of the Pier's current financial performance and revenue potential;
(3) Review of different governance and management approaches utilized at other
comparable public venues considered in the context of the Pier's operations;
and
(4) Recommendations on ways to improve the City's stewardship of the Pier.
The report also integrates feedback that the City Manager and executive team received
following a series of interviews with stakeholders, including current and past PRC Board
members and staff, Pier tenants, City and PRC staff, and other interested parties, which
provided an understanding of the issues and stakeholder aspirations for the Pier. In
addition, City and PRC staff gathered and reviewed an extensive collection of data
including planning and financial documents, operating practices, and staffing and
service levels of both City and PRC.
Following feedback from stakeholders, a review of City and PRC operations and fiscal
performance, and a review of differing governance and management models employed
at similar venues, the report identified a series of findings as part of the development of
the recommended approach. Findings which serve as a basis for the recommended
approach call on the City to:
• Articulate a clear vision for the Pier. The last public visioning process to
identify the current and future community needs for the Pier was in 1988.
• Solicit new Pier tenants using industry best practices. The current process
utilized by the City and PRC can be lengthy, bureaucratic and unpredictable and
deter the City's ability to attract top tier tenants.
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• Consolidate oversight of Pier operations within the City. A number of City
departments have Pier - related responsibilities. While certain functions logically
fall under the scope of different departments, currently it is, at times, unclear
which department, if any, has the lead role in making determinations and
providing direction.
• Ensure a transparent decision - making process with clear lines of authority
and accountability. The actions of the City and the PRC should be transparent
to the public and the public should be actively encouraged to participate in its
decision - making processes.
• Improve the financial transparency and accountability. The PRC needs to
develop improved financial policies, procedures and record - keeping. The City
should better attribute all Pier - related expenses to the Pier Fund for a clearer
picture of the full costs of operating the Pier.
• Prioritize revenue generation. Pier revenue generation and cost efficiencies
need to be prioritized in order for the Pier to reduce General Fund subsidies.
• Improve coordination for activities that happen on and around the Pier.
The Pier operates in close proximity to many other public and private activities.
Efforts to better integrate the Pier and adjoining areas are needed.
Based on the findings and analysis, the Study recommends specific changes to the
current governance and management. In addition, following input from the PRC at its
November 10th Board meeting, staff has incorporated a PRC suggestion relating to the
appointment of the board of the successor organization to the PRC. Recommendations
are summarized below:
1. Establish an on -site Office of Pier Management. Positioned under the
auspices of the City Manager, the Office would coordinate and consolidate
oversight of day -to -day activities on the Pier. This centralization should provide
improved coordination, communication, efficiency, and accountability needed to
improve the delivery of services on the Pier and coordination of activities around
the Pier. The Office's responsibility would include oversight of all City functions,
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including tenant relations, as well as the services provided by City contractors
and entities such as the PRC.
2. Rename the PRC and modify the composition and size of its Board. Since
the Pier has been restored, the name of the Santa Monica Pier Restoration
Corporation should be changed from a focus on restoration to one that more
clearly reflects the organization's current and future mission. Suggested options
for consideration include the Santa Monica Pier Corporation, the Santa Monica
Pier Marketing and Events Bureau, or the Santa Monica Pier Marketing
Corporation.
The composition and size of the renamed board should be modified to better
reflect the organization's objectives and to enhance efficient decision - making.
The 11- member board should be reduced to seven members to support more
focused consideration of policy matters. Appointment of board members should
reflect the various constituencies that the board represents.
The Study suggests that the board appointment structure be patterned on the
Santa Monica Convention and Visitors Bureau (CVB) and Downtown Santa
Monica Inc., whereby a portion of the board membership is appointed by Council
with the remaining seats appointed by other stakeholder organizations. The
Study recommends that Council appoint four members, with the Santa Monica
Chamber of Commerce, the Santa Monica Convention and Visitors Bureau, and
the Santa Monica Pier Lessees Association each appointing one member to
complete a seven - member governing board.
The PRC Board recommended modifying this approach, advising that Council
appoint all seven members with the Chamber of Commerce, CVB and Pier
Lessees Association invited to nominate candidates for Council's consideration.
Staff supports this modification to the Study's recommendations.
In addition, City staff, in consultation with PRC staff, would propose qualifications
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for consideration of applicants for the board of the successor organization. If
desired, staff could also help screen and recommend a group of qualified
community leaders for the interim Board of Directors. The proposed structure as
recommended by the PRC Board would ensure that the owner and steward of
the Pier (the City), as well as the business community, tourism community, and
Pier tenants, have an opportunity to be represented on the Board.
Public participation has been and will continue to be essential to the Pier's
success. Under the proposed realignment, the renamed PRC Board would
advise Council on Pier - related policy matters including the facilitation of public
involvement in the development of a Pier Master Plan, as well as setting goals
and guidelines for marketing, events, and sponsorship. In addition, the PRC
Board would work with staff to articulate a vision for the Pier and new Leasing
Guidelines that balance competing needs while implementing more common
commercial leasing practices. Approval of leases, however, would no longer be
part of the renamed PRC's responsibility and would instead return to the City with
leases approved by Council.
3. Focus staff of the renamed PRC on event production, marketing,
promotions, sponsorships and fundraising. PRC staff would continue to
focus on its core mission of event production, filming, promotions and marketing;
however, the Study recommends that other roles that the PRC has had to
assume in the absence of a strong City presence, including tenant relations and
coordination of day -to -day City operations, return to the City.
Implementation
The City Manager can initiate the reorganizational changes associated with enhanced
coordination of City services and creation of the Office of Pier Management. If additional
funding is needed to implement the reorganization, as well as provide desired levels of
service on Pier, changes will be recommended as part of the mid -year budget process.
Staffing levels anticipated include a Pier manager position and support staff.
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Modifications related to the name, governance structure, and functions of the PRC
would require Council approval. With Council direction, next steps include:
1. Council to approve criteria for new Board members and advertise the openings,
inviting the Chamber of Commerce, Convention and Visitors Bureau and Santa
Monica Pier Lessee's Association to nominate applicants.
2. Council to appoint members to the new interim board, at which point the existing
board will sunset.
3. Council and new board to approve modifications to the Services Agreement.
4. Council and new board to approve new by -laws.
5. New Board to begin work on the Pier Vision, Master Plan, and guidelines for
leasing, marketing, special events, and sponsorships.
While the process of developing new leasing guidelines is underway, Council would
assume responsibility for approving Pier leases. Staff is currently reviewing proposals
received following a Request For Proposal solicitation for a restaurant/entertainment
opportunity at 256 Santa Monica Pier. Staff will bring a recommendation to Council once
a full review is completed.
For the next two years, City staff, in partnership with the new Pier board and staff, will
continue to review and evaluate the effectiveness of the governance and operational
structure to assess whether additional changes are warranted.
Commission Action
The PRC Board reviewed the Study and discussed its findings and recommendations at
a special Board meeting held on November 10, 2011. The Board approved the Pier
Governance and Management Study as presented, with the recommendation that the
City Council select all seven board members based upon a set of criteria to be
developed by City staff and approved by Council. The Board also requested that the
City complete a cost allocation study to ensure costs are appropriately attributed to the
City's Pier Fund, and to initiate an economic impact study of the Pier. Staff agrees with
these recommendations.
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Financial Impacts & Budget Actions
There is no immediate budget /financial impact to the policy decision. If additional budget
authority is necessary to implement the recommendations, staff will seek Council
approval at a future meeting.
Prepared by: Elana Buegoff, Senior Development Analyst
Andy Agle, Director
Housing and Economic Development
Attachment:
Forwarded to Council:
/ V
Rod Gould
City Manager
A. Santa Monica Pier Governance and Management Study, October 2011
-R
City Attorney
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PRC Operations
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Staff and Major Functions
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Pier Fiscal Performance
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Pier Enterprise Fund
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Pier Fund Revenues
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Pier Fund Expenses
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Indirect Costs and Depreciation Accounting
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Budget Projections
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Enterprise or Public Good?
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Revenue Enhancement Opportunities
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Beach Enterprise Fund and State Operating Agreement
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Reductions of Expenditures to the Pier Fund
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City Funding to PRC
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Waived City Fees
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PRC Operational Revenues and Costs
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Combined Revenues and Expenses for the Pier
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Approaches to Governance and Management
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Advantages with the Current Approach
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Disadvantages of Current Approach
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Comparative Pier Management Survey
Alternative Management Scenarios
Scenario 1: City Manages All Pier Operations
Scenario 2: Non - profit Manages All Pier Operations
Scenario 3: Non - profit Entity Focused on Marketing, Events and Fundraising
Scenario 4: Master Ground Lease with Private Entity
Scenario 5: Realignment of Existing Structure
Chart 1. Comparative Pier Management Models
Chart 11. Alternative Management Model Scenarios
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Introduction
For over a century, the iconic Santa Monica Pier has stood, at times precariously, over
waters of the Santa Monica Bay. Today, it endures as one of the most dynamic and
cherished public spaces, not only to the residents of Santa Monica, but to visitors from
around the region and world. As when the Pleasure Pier first opened to the public in
1909, today's visitor also expects the Pier to be an accessible, safe, well- maintained and
enjoyable public space, regardless of who owns or manages it.
The Pier has become a year- round destination with millions of visitors from all walks of
life. The Pier is home to a collection of public and private uses: an amusement park, a
children's aquarium, civic spaces, fishing nooks, outlets for artistic expression, and a
variety of unique entertainment, retail, and food options. Historic resources such as the
Loof Hippodrome and its carousel have been preserved and rehabilitated, public facilities
and amenities have been modernized and the venerable summer Twilight Dance Series
(TDS), now in its 27th year, crowns an impressive schedule of new and recurring
community events. A capital improvement program monitors and upgrades the Pier's
infrastructure and a committed security unit ensures that public safety, both below deck
and above, is maintained. Today, much of the 1988 Pier Development Program has
become a reality and many of the Santa Monica Pier Restoration Corporation's (PRC's)
founding objectives have been achieved.
While these improvements have unfolded slowly at times, the struggles have yielded
successes as a result of the concerted efforts on the part of both the PRC and the City. In
contrast to the Pier during its darkest days, neglected and broken, the Pier has been
transformed into a special destination —one that provides Santa Monica with a
connection to its history, a sense of community, and a welcoming destination for visitors
from around the globe. The Pier contributes immeasurably to both the Santa Monica
psyche and economy.
The recent departure of the long- serving PRC Executive Director, as well as the upcoming
master planning process for the Santa Monica Pier, provide an opportunity to evaluate
the City's management and support of the Pier, as well as the PRC's management and
support, to ensure that the Pier is optimally positioned for the next chapter in its
evolution.
With that goal, the City and the PRC have undertaken this Study to provide an
assessment of governing, financial, and operational approaches for the Pier. Going
forward, the decisions on how to manage and operate the Pier will be guided not by a
need to 'save' or restore it, but by an opportunity to build upon its successes and achieve
its full potential.
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Findings
and
Conclusions
New approaches to long- standing conditions require changes to the current governance
and management model of the Pier. Changes can range from modifications to the existing
structure to a completely new governance and operating structure, but any changes to the
current system should integrate the following key components:
• Articulate a clear vision for the Pier. Managing the Pier requires balancing its roles
as a recreational venue, an entertainment venue, a historic venue, a commercial
venue, and a community venue. It also requires assessing priorities when the roles
compete with each other. Irrespective of the structure used to manage and operate
the Pier, the City needs to articulate a clear vision for balancing competing needs
that Pier management can follow.
Solicit new Pier tenants using industry best practices. Currently, Pier tenants are
selected through the City's typical request-for-proposals process. While the practice
is common for selecting consultants and others to provide professional services for
the City, it is uncommon in the world of commercial leasing and can turn away
potential tenants who perceive the practice to be bureaucratic, uncertain, and
expensive. There are opportunities for improving the tenant recruitment and lease
negotiation process while meeting requirements for public notification of
commercial leasing opportunities on publicly owned property. There are also
opportunities to simplify and expedite the tenant selection process and provide
greater predictability.
• Consolidate oversight; however it may not be necessary to combine all functions
under one entity. The responsibility for various Pier functions is spread among
various City departments, divisions, and the PRC. Consolidating activities with
coordinated decision - making could provide better efficacy and accountability and
help improve transparency.
• Ensure a transparent decision - making process, with clear lines of authority and
accountability between the PRC and the City. The activities of the PRC (or successor
organization) should be consistent and transparent, with a clear mandate, if a co-
management approach is maintained.
• Improve the financial transparency and accountability of the PRC. No
misappropriations or violations have been found as part of this Study, however,
issues concerning fees charged for the use of the Pier, lack of formal procedures for
contract approvals and personnel matters, and weaknesses in record - keeping
indicate opportunities for improvement.
• Improve the financial transparency of the City. Currently, the City does not
attribute all expenses of operating the Pier to the Pier Fund. Conversely, the City
should evaluate the applicability of some expenses currently charged to the Pier
Fund including policing /harbor unit expenses, Pier police patrol, as well as other
accounting expenses.
• Improve communication and lines of authority among City divisions. A number of
City departments have Pier - related responsibilities. However, it is not always clear
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Recommended
Approach
The PRC was formed 28 years ago to restore and revitalize a devastated Pier. Today, that
mandate has been accomplished. Many revitalization objectives envisioned in the 1988
Santa Monica Pier Development Program have been realized and the Pier has emerged as a
cherished icon of the City and one of the most dynamic public spaces in the region.
However, the Pier faces new challenges as it begins its second century and a new
governance and management structure could better meet the Pier's existing and emerging
needs.
City staff and the professionals at Urban Place Consulting acting on behalf of the PRC, but
without involvement of PRC board members, have developed a recommended approach
designed to address the opportunities and concerns identified in this Study, chiefly the
disbursal of responsibility for Pier operations among many different divisions within the City
with no centralized decision - making; the need for a more transparent process with clear
lines of authority and accountability between the City and its nonprofit partner; and the
need to improve the Pier's fiscal performance and reduce reliance on the General Fund.
The recommended approach is designed to be an interim measure to allow the City to
retain what is best about Pier operations while giving it an opportunity to closely evaluate
how operations could be improved. It is anticipated that after a period of approximately
two years, additional changes may be needed.
The recommended approach calls for:
1. Enhance coordination and consolidation of the City's responsibilities through the
establishment of an on -site Office of Pier Management. The Office of Pier
Management would be responsible for overseeing day -to -day activities, including
coordinating Pier operations with other City divisions and City contractors. The
Office would ensure that those City divisions and contractors responsible for Pier
functions are working together and that there is a single point where decisions are
made and competing interests are resolved on behalf of the best interests of the
Pier.
In order for the Office to operate most effectively, the City would need to establish
administrative protocols that would ensure accountability while also permitting the
Office to use efficient, non - bureaucratic approaches to address the day -to -day
needs of the Pier. Leasing policies and practices need to be improved and stream
lined in order to attract high - quality tenants and to support enhanced operations
by existing tenants. Among the constraints of the current approach is the
requirement to select tenants through a complex and multi - layered process and the
prohibition on broker commissions. The Leasing Guidelines should be revised to
review preferences and policies and to allow the City to actively engage the services
of commercial brokers and other real estate professionals.
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public participation in the development of the following Pier - related policy matters:
Recommending an overall vision for Pier operations that balances its roles
as a recreation venue, entertainment venue, historic venue, commercial
venue, and community venue.
ii. Assisting in the development of the Pier Master Plan. In 2012, the City will
embark upon the development of a new Master Plan. This process will
involve the Pier stakeholders and the Santa Monica community in a
dialogue that will produce a vision and implementation plan for the
development and operation of the Pier in the coming decades. The board
would play a central role in facilitating public and stakeholder participation
and making recommendations to the City Council regarding the Master
Plan.
iii. Developing and recommending amended Leasing Guidelines that balance
competing needs while implementing more common commercial leasing
practices. Approval of leases, however, would no longer be part of the
renamed PRC's responsibility and would instead return to the City.
iv. Developing and recommending event and marketing policies that foster
community participation and revenue generation while endeavoring to
minimize any negative impacts on Pier visitors and merchants.
Reviewing of the Pier governance realignment and making
recommendations for improvements or adjustments.
3. Focus staff of the renamed PRC on event production, marketing, promotions,
sponsorships and fundraising. PRC staff would continue to focus on its core
mission however, other roles that the PRC has had to assume in the absence of a
strong City presence, including tenant relations and coordination of day -to -day City
operations would return to the City.
The existing PRC staff has demonstrated experience and success with community
event production, filming, promotions and marketing. Community events are a
vital element of the Pier's unique character. The Twilight Dance Series, now in its
27th year, has become a beloved tradition for residents and visitors, defining the
way Santa Monica celebrates summer. Other programs, ranging from the
Paddleboard Race to Saturday morning's Wake Up to the Waves children's
concerts, and from large -scale productions to small -scale community events, bring
enjoyment to Pier visitors and make the Pier relevant to the lives of Santa Monica
residents.
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Methodology
This report draws on many sources including best practices research, Pier policy documents,
financial documents, review of City and PRC internal procedures, and input from
stakeholders.
Over a period of several months, the City Manager and members of the executive team met
with stakeholders including current and past PRC Board members and staff, Pier tenants,
City staff, and other interested parties to understand their aspirations and concerns for the
Pier.
The PRC staff provided data related to PRC programs and procedures and contributed
suggestions on ways to improve its internal operations. City staff reviewed past and existing
governing and financial documents including Service Agreements, Pier Leasing Policy
Guidelines, City Council staff reports, PRC work plans, City and PRC budgets, and audits.
Planning documents, including the 1988 Pier Development Plan, the 2009 Pier
Infrastructure Study, the 2011 'Managing Our Public Spaces' Study, the 2007 PRC Pier Fund
evaluation, and the State Operating Agreements, were also reviewed. City divisions
including the Parking Office, Police Department, Community and Cultural Services
Department, and Public Works Department were consulted
City staff's research expanded upon the 2011 "Managing our Public Spaces' Study
commissioned by the PRC (Appendix i). That report examined the management structure of
a number of publicly owned venues such as The Ferry Building (San Francisco), Findlay
Market (Cincinnati), Pike Place Market (Seattle) and Navy Pier (Chicago) selected from the
Project for Public Spaces' database of "Great Places." For this report, City staff expanded
the review of comparable public venues to include Stearn's Wharf (Santa Barbara), Santa
Cruz Wharf, Fisherman's Wharf (Monterey), the Redondo Beach Pier and Pier 39 (San
Francisco).
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In 1999, as part of budget considerations, Council concluded that lease negotiations and lease
Shifting management responsibilities were to be transferred to the City's Economic Development
Roles: Division (EDD) and supported by the Office of the City Attorney. This shift relieved the PRC
Services from utilizing staff time and employing outside attorneys to handle negotiations and leasing
Agreement issues and instead focused the PRC on developing and managing revenue - enhancing programs
2001 and activities including corporate sponsorships, marketing and promotions, special events,
filming, and licensing of the Pier's trademark. The PRC continued to take responsibility for the
formulation of planning and development objectives, leasing policies and parameters, and
providing recommendations to the City on matters related to maintenance, parking, public
safety and capital improvements. The shift in responsibilities was reflected in a new Services
Agreement authorized by Council in 2001.
In addition to Council's approval of the PRC's annual budget, Council oversight included review
and approval of PRC- recommended Pier Leasing Guidelines and of an annual business plan
with a detailed outline for all aspects of responsibilities under PRC's purview.
Major changes in the 2004 Services Agreement involved adding new functions and
PRC responsibilities to the PRC's scope. The 2004 agreement specified the PRC's new focus on
Services community outreach programs, education programs and community -based events along with
Agreement, its previous mandate to market, promote and manage special events. The agreement also
2004 and added street performer monitoring to PRC's staff tasks. The 2010 amendment to the Services
2010 Agreement gave the PRC responsibility for booking and managing special events at the
Carousel in an effort to generate additional revenues to support its operations. Council's
oversight and review of PRC activities has been through its appointment of members to the
PRC Board of Directors, annual review and approval of the PRC business plan and budget, and
review and approval of periodic updates to the Santa Monica Pier Leasing and Licensing
Guidelines.
Through all iterations of the Services Agreements, the City's responsibility has continuously
City's included maintenance and repair of the Pier including pilings and substructure, public facilities,
Changing common areas, public safety, and operation of the parking lot located on the Pier deck. In
Roles addition, the 2001 Services Agreement transferred leasing responsibility from the PRC to the
City.
During the formation of the PRC and reconstruction of the Pier the City retained a strong staff
presence on the Pier, overseeing both the reconstruction efforts and the day -to -day
management of the public areas. The City established the position of Pier Manager, who
oversaw maintenance, parking, and public safety staff, as well as provided oversight of capital
projects. The Pier Manager and staff were located on -site at the Pier and shared offices with
the PRC.
The City's Pier management structure remained intactfrom 1984 until 1992 —at which time
the reconstruction of the Pier was completed and the Pier Manager position was eliminated.
The principal management responsibility for Pier was transferred to the staff of a newly
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Current PRC
Board
Structure
The Council appointed eleven- member PRC Board of Directors (Board) oversees both public
and commercial uses of the Pier. Responsibilities include the development and implementation
of programs and activities forthe promotion and marketing of the Pier; development and
implementation of sponsorship programs to generate revenue to support PRC activities;
management of street performers; management of carousel party bookings; approval of Pier
leases and licenses consistent with guidelines adopted by the Board and approved by Council;
and policy recommendations for City Council's consideration on all matters affecting the Pier.
Terms are for four years and Board members can be reappointed for several terms.
In order to be appointed to the Board, established criteria calls for "demonstrated experience
in the following areas: development finance; commercial leasing and /or development; coastal
issues; recreational facility management; architecture /urban design; landmarks; and
demonstrated commitment to the preservation and maintenance of the historic character of
the Santa Monica Pier." Board members can either be residents of the City of Santa Monica or
persons who do business or are employed in the City of Santa Monica.
A review of applications submitted to the City Clerk for appointment to the Board indicates
that the composition of today's Board consists of approximately half with demonstrated
experience in finance /accounting and commercial leasing /development, while others have
demonstrated experience in fundraising, events management, and marketing, though
currently these are not specified eligibility criteria for appointment to the Board.
The Board meets monthly with several subcommittees that meet on an as- needed basis.
Board Committees include Executive; Operations and Public Safety; Leasing and Development:
Audit and Budget; Marketing; and Twilight Dance Series. In line with other boards and
commissions, Council no longer appoints a liaison to the PRC.
Stakeholder concerns regarding the PRC Board included: the size of the board can make
decision - making difficult and slow, certain Board members bring valuable expertise to the
board while others' added value is unclear, Board members' commitment and expertise is not
always used effectively and Board meetings frequently involve disagreements and arguments
rather than constructive and collaborative efforts.
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the ability of private sponsorship to fully fund the free events
Success in marketing the Pier as an event space has also given rise to concerns from some Pier
tenants who are concerned that increasing numbers of events, in the Pier parking deck
programed by the PRC, as well in the 1550 Pacific Coast Highway Lot adjacent to the Pier and
programed by the City, can have adverse impacts on their businesses. Other Pier tenants had a
very favorable impression and expressed their support for more events.
Special events in the 1550 Lot such as Cirque du Soleil (CDS), Cavalia and Ashes and Snow have
demonstrated economic and community benefits. However, certain Pier tenants who say they
have not benefitted from these types of events expressed concerns that event attendees do not
necessarily translate into their customers, that the impact on parking can be detrimental to their
operations, and that some events offer amenities (i.e. food or beverage service) that directly
compete with their offerings. An Economic Impact Study on Cirque du Soleil (CDS) prepared by
AECOM /Schlau Consulting in 2010 concluded that Pier restaurants performed nine percent better
during the CDS event than they would have otherwise, while entertainment businesses at the Pier
experienced a one percent reduction in revenues during the CDS period than they would have
otherwise. The positive net impact to the Pier businesses resulting from CDS was $420,000, even
after adjusting for displaced sales.
The Pier continues to be an increasingly strong draw for visitors. A study by Urban Place
Economic Consulting commissioned by the PRC estimates that the number of annual visitors has increased
to over six million, a major increase over the decade -old approximation of 3.5 million.
The increasing number of visitors has translated to higher gross sales revenues for the Pier,
bucking the trend in the current recessionary period. Gross revenues of Pier businesses were
approximately $38 million in 2009, $41 million in 2010 and over $43 million in FY 2011. The Pier
also serves as an employment node employing over 600 people year -round with seasonal
employment in the summer increasing by 25 percent to 50 percent. The 2010 sale of Pacific Park,
at $34 million is also a testament to the value of the Santa Monica Pier.
The Pier generates other taxes and fees including $182,849 in sales taxes, business license taxes,
and parking taxes, $20,900 in film permits, and helps generate parking revenues in the
surrounding public parking lots that benefit the City's Beach Fund.
The Pier also adds value to other Santa Monica businesses that benefit directly and indirectly
from Pier visitors both from direct spending and from the desirable ambience and culture the Pier
helps to promote. Visitor spending on the Santa Monica Pier and in the community results in
additional sales tax and hotel tax receipts for the City.
Total commercial development on the Pier consists of approximately 129,000 square feet of
Commercial leased building and deck area. The Pier tenant mix is 71 percent amusement, 25 percent dining
Leasing (with and without music entertainment), four percent educational and one percent retail. All
vacant leaseholds on the Pier have been leased (with the exception of 370 Santa Monica Pier
18 v10 -14 -11 Draft
6. There are contradictions between the Services Agreement and Leasing Guidelines.
Whereas the Services Agreement states the PRC is not to negotiate leases, the Leasing
Guidelines provides the PRC with the ability and opportunity to do so using the City
Negotiator as a proxy. This blurs lines of authority, lengthens the negotiation process and
can cause uncertainty for prospective tenants.
7. Leases are not approved by the City Council. PRC Board Leasing decisions are not
appealable to the City Council. As a result, the leasing decisions may not reflect the
broader community's aspirations for the Pier.
8. Some tenants are not meeting community expectations regarding quality of offerings and
experience. However, neither the City nor the PRC has taken responsibility for
encouraging or requiring tenants to improve their offerings. In addition, long- standing
tenancy and relationships with PRC board members often takes precedence over quality
offerings in leasing decisions. As a result, attempts to improve the quality of offerings on
the Pier can suffer.
9. Existing tenants are forced to compete through a request- for - proposals process when
their leases expire, even if the quality of their offerings is deemed appropriate and
beneficial to the Pier.
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HIED-EDD
Responsibilities that fall within EDD's purview involve four primary categories: leasing and
lease administration; property management; Pier Fund administration; and contract
administration.
• Leasing roles include administration of recruitment, selection, and lease
negotiation; monitoring of tenant and City compliance with the terms and
conditions of approved leases; lease enforcement; responding to tenant and visitor
inquiries and requests related to Pier leases and property management matters;
billing and collection of rents and other revenues.
• Property management role includes monitoring and coordination with tenants and
City departments including Pier Maintenance, Custodial Services, Civil Engineering
and the PRC on day -to -day maintenance, preventative maintenance, and Capital
Improvement Programs.
• Pier Fund administration includes revenue and expenditure management including
Capital Improvement requests.
• Contract administration includes the carousel operator contract and the PRC
Services Agreement. EDD's role specific to the PRC include assisting the PRC staff
and Board with facilitating their work, providing technical assistance to the Board,
preparing and submitting reports, Request for Proposals and leases to the Board;
responding to Board and staff requests for information and direction, and
forwarding Board's actions to Council.
EDD staff's workload includes other business districts and programs in addition to the Pier
responsibilities. EDD does not have full -time staff positions dedicated solely to the Pier and
accordingly only charges a portion of staff time to the Pier Fund: the Economic
Development Manager charges 20 percent of salary time, a part -time Sr. Development
Analyst charges 80 percent of salary time, and a Staff Assistant charges 10 percent salary
time to the Pier Fund. In total, EDD staff charges the Pier Fund with 37 hours of staff time
per week.
Pier - related responsibilities are also assigned to additional EDD staff that do not charge
their time to the Pier Fund: Sr. Administrative Analyst handles vending cart and leasing
issues; an Executive Assistant is responsible for billing and collecting tenant rents and
other accounts receivable and an Administrative Services Officer prepares budgets, and
monitors income, expense and capital improvement accounts for the Pier.
Stakeholders expressed concerns regarding the ability of the City's traditional procurement
process to secure desirable tenants, as well as the City's experience with the latest
innovations and best practices in leasing as described in the "Commercial Leasing" section
above.
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Pier
Maintenance
The Pier Maintenance staff is located on -site at the Pier Maintenance Shop situated
adjacent to the Police Sub Station.
The Pier Maintenance crew is comprised of one Pier Maintenance Supervisor, one
Carpenter, two Pier Maintenance Workers, and one half -time Painter for a total of 4.5
employees. Pier Maintenance staff works a 9/80 schedule (6am to 3:30pm) and alternate
Fridays (6am to 2:30pm).
Pier Maintenance is supported by the Facilities Management division which provides
additional assistance to Pier Maintenance. Pier Maintenance and Facilities Management
utilize a web -based system for maintenance related work orders. Users can submit new
work orders, add to existing work orders, close work orders, or track the status of work
order requests. More than 200 work orders per year are issued primarily for electrical
(lighting / power) and plumbing (restroom / sewer line maintenance) plus HVAC, paint,
carpentry, project management of facility repairs and upgrades, as needed.
Pier Maintenance is responsible for the following services:
s Maintenance of over 413,050 square feet of wood and asphalt decking;
• Maintenance of the historic Carousel building and Santa Monica Pier sign;
• Daily inspection and management of the Pier infrastructure, including plumbing,
electrical; and fire safety systems;
• Management of various third party maintenance contractors (deck board
maintenance, painting, graffiti removal, fencing, pigeon removal, pier signage,
electrical, pump / plumbing (fish cleaning stations), compactor, pest management,
flooring, generator service, Wurlitzer organ, signage, roofing, locksmith, etc.);
• Logistical and technical support to annual special events and movie and
commercial film productions (including Facilities Management staff if the PRC
requires electrical or other assistance / setup) and do not charge the PRC or event
producer for staff time. The PRC compensates Pier Maintenance for the repair of
property damage resulting from film shoots or special events. The PRC requires
film shoots and special event producers to post a refundable security deposit.
The current pier maintenance staff is highly experienced and knowledgeable regarding the
specialized maintenance needs of the Pier. The Public Works Department should have a
succession plan in place to develop existing staff with the required knowledge, skills, and
abilities to replace those who retire, and update its manuals so that standard operation
procedures are available to existing and new staff.
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Public Work's Engineering Division is responsible for the implementation of Pier capital
Civil improvement construction projects. Exhibits 1. and 2. describe the capital improvement
Engineering project expenditures from FY 2000 through 2011 and future capital projects that the City
has planned forthe Pier through 2015/16.
The Santa Monica Police Department (SMPD) and its Harbor Unit take primary
Public Safety responsibility for the public safety on the Pier.
The Harbor Unit provides 24 -hour support to the Pier and adjacent beach and coastal
areas in Santa Monica. The unit provides public safety services including water rescue, first
responder functions and security. The unit operates from the Harbor Patrol Office located
on the 2 "d level at the west end of the Pier. The unit patrols on foot, drives a marked police
truck and a marked police boat (Monica 1), and will ride bicycles at times. The Harbor
Service Officers (HSO) role is not to take enforcement action, but to observe and report.
The HSOs are overseen by a Police Sergeant who also oversees other police functions.
There are currently six full -time HSOs and the hiring of a seventh is in process. In addition
to full -time staff, there are eight as- needed HSOs. These positions are seasonal and
supplement base -line normal deployment. The Harbor Office is staffed by two HSOs
during the hours of 8amand 4am and one HSO between 4am and 8am. The HSO's patrol
the beach and parking lots twice a day, once in the morning and once in the evening. They
are responsible for locking and then unlocking the gates at a number of beach lots both
north and south of the Pier.
The Harbor Unit maintains a scuba dive team that monitors and maintains 21 buoys which
border the breakwater and keep boaters away from the Pier. These duties require HSOs to
dive to inspect the buoys lines and anchors, and set in replacement buoys as needed.
While the dive team does not perform detailed inspections of the Pier's underwater
substructure and piles, divers do check for obvious structural issues and any anomalies on
the piles.
An HSO is required throughout the duration of an approved event or filming. Additional
support from SMPD, as well as the Fire Department, may be required as determined by the
City Permit Office. Hourly fees for safety personnel are paid directly to the City by the
event producer or film company and are not reflected in Pier Fund revenues.
A summary of HSO Duties include:
• Patrol Pier, beaches, and beach lots
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Others Division that Support the Pier
The 277 parking spaces on the Pier's deck are managed by the City's Parking Office, a
Parking division of the Finance Department. The Parking Office oversees a parking contractor who
Division operates this parking facility, as well as all other municipal parking facilities in the City.
The Parking Office manages the City's parking resources as a single, coordinated unit.
The Parking Office has five staff positions and oversees a third -party contract parking
operator that supplies labor and management for the day -to -day operation of the Pier
parking lot. The Parking Office coordinates with the parking contractor, the PRC and special
event producers for the rental of the pier parking lot for events and filming.
For FY 2010/11, parking on the Pier Deck generated approximately $1 million to the Pier
Fund, which was charged $347,387 for the parking operator and a portion of the Parking
Division's staff salaries and office expenses. Parking rates on the Pier Deck are set by
Council.
A stakeholder concern is that management of the Pier deck parking does not allow for the
kind of flexibility requested by some PRC- managed special events.
The City Attorney's Office drafts all leases and licenses, pursues legal actions as necessary
City for the defense and prosecution of leasehold disputes and advises staff and Council on all
Attorney legal matters involving the Pier. The cost for City Attorney's Office services are not directly
charged to the Pier Fund, but are included as part of the Indirect Cost Allocation.
A stakeholder observation is that additional use of private attorneys and firms specializing in
commercial real estate may be needed.
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• Coordinates all marketing, advertising and collateral efforts,
• Prepares weekly 'On Deck' newsletter hand delivered to Pier Tenants informing
them of upcoming events and promotions.
Administrative Assistant
• Answers phones; responds to inquiries from the public; provides clerical services,
• Manages street performers,
• Prepares weekly vending cart rotation.
Weekend Activities Coordinator (Part -Time)
• Weekend street performer monitoring,
• Answers phones on weekends,
• Site manager for all PRC produced events (TDS, Drive -in movies, etc) and supervises
Chrysalis crew on day of events,
• Oversees weekend carousel birthday party set up and clean up.
Contractual Arrangements: The PRC currently has contractual agreements relating to the
Executive Director vacancy and Twilight Dance Series (TDS) event production and
sponsorship.
• Urban Place Consulting Group is under contract to provide interim executive
director services during transition.
• DHR International is under contract to.provide executive search services for the
Executive Director position (recruitment for this position has been put on hold
pending the outcome of the governance assessment).
• Rum & Humble, Inc. provides producer, talent buyer, talent manager, stage
manager and production manager for TDS concerts. Tasks not within the scope of
work of consultant are provided by PRC staff.
• A consultant has been retained to provide assistance with securing sponsorship for
TDS under a commission based sales /sponsorship contract.
PRC Core Activities: PRC staff is responsible for all the day -to -day activities that occur on
the Pier. These include:
Carousel Parties: The City has an operating agreement with Roth Management to
operate and maintain the Carousel. As a result of the 2010 Services Agreement
Amendment, the PRC was assigned responsibility for managing private and semi-
private events within the Carousel building. City Council sets rates for rental of the
Carousel. During FY 2010/11, the Carousel hosted 150 children's birthday parties,
21 private parties, one semi - private party and eleven film shoots. PRC staff has
recognized opportunities to increase the number of events by marketing the venue
to hotels in the area. Rental income totaled $87,552, of which half was retained by
30 v10 -14 -11 Draft
of his time to planning while other staff devote from 30 percent to 60 percent of
their time. During the summer, the Executive Director spends 70 percent and the
Deputy Executive Director spends 100 percent of their time on TDS matters and all
PRC staff are dedicated to TDS on the day of each concert.
The total cost to produce the 2011TDS season was $264,783. This cost includes
reimbursement to the City of about $38,220 for related to public safety and fire
personnel (Exhibit 8 -B. Twilight 2011 Series Actual Performa). While TDS is an event
that celebrates summer in Santa Monica on the Santa Monica Pier, stakeholders
have questioned why the PRC is tasked with responsibility for fundraising and
production for what is now a significant local and regional event. Other
stakeholders have questioned whether the event, which was created as a way to
reacquaint residents with the Pier, is still necessary, particularly as the Pier now
receives over six million visitors annually. Some stakeholders have suggested that
TDS might be considered as a broader community event with its own stakeholder
group that takes principal responsibility for fundraising and production. Others
have suggested that if the primary objective of TDS is to bring visitors to the Pier, it
should be scheduled at a time when the Pier is not already flush with visitors.
• Tenant Relations: PRC staff attends monthly Santa Monica Lessee's Association
(SMPLA) meetings and provides a report about upcoming events and issues on the
Pier. PRC staff is available to discuss issues brought up by tenants. Tenants also
receive a weekly newsletter prepared by the PRC informing them of upcoming film
shoots and events.
Informal interactions with tenants can occur daily. The previous Executive Director
spent considerable time walking the Pier and interacting with the tenants, however
currently without a full time Executive Director, staff time is limited and interactions
with tenants are less frequent.
City Division Coordination: PRC staff interacts with City Departments and Divisions
especially with Pier Maintenance, which is located on site at the Pier, and both PRC
and City staff report good relations.
Stakeholder concerns regarding the PRC's core responsibilities include concerns over
whether the Executive Director salary is sufficient to find a candidate who possesses the
necessary capacity and experience with marketing, board stewardship, operations,
fundraising, and long -term visioning. Other stakeholders expressed concerns regarding a
top -heavy organization where the Executive Director has historically handled most matters
and the supporting staff has little exposure to the organization's full range of needs. Some
stakeholders noted that other Santa Monica non - profits, such as the Convention and
Visitors Bureau and Downtown Santa Monica, Inc., provide similar functions with greater
expertise and sophistication.
32 v10 -14 -11 Draft
Pier Fund expenditures are divided among the following three units: Economic
Pier Fund Development, Harbor Unit, and Maintenance. Charges to the Pier Fund for each unit
Expenses are broken down into "Salaries and Wages' including benefits, and "Supplies and
Expenses'. Under "Supplies and Expenses" the Pier Fund is charged for utilities,
general liability, and its proportional share of overhead including indirect cost
allocation and depreciation. Exhibit 10. provides the detail on each Divisions'
expenditures.
Total charges to the Pier Fund for 2010/11 was $5,161,610 and represents nearly no
change from the previous two fiscal years.
Economic Development in 2010/11 charged $2,128,417 to the Pier Fund. Salaries and
wages of $173,363 accounted for nine percent of its expenditures. The remaining 91
percent was spent on Supplies and Expenses, primary funding for contractual services,
such as the grant to the PRC in the amount of $494,900, the operation of the Carousel
in the amount of $190,588, the operation of the Pier Deck parking lot in the amount of
$347,387, and Police Pier Patrol in the amount of $240,010.
The Harbor Unit in 2010/11 charged $1,222,342 to the Pier Fund, with $1,048,171 or
86 percent of expenses related to salaries and wages and the remainder for supplies
and expenses.
The Pier Maintenance Unit in 2010/11 charged $1,810,851 to the Pier Fund. Salaries
and wages of $592,532 accounted for 33 percent and the remainder was spent on
supplies and expenses, almost half related to contractual services with private
companies to provide custodial services, deck board repair, and nail patrol services.
The expenditure budget includes two line items whose application of charges changes
Indirect the balance of the fund: "Depreciation" and "Indirect Costs ".
Costs and
Depreciation Indirect costs are those costs incurred in the general support and management of the
Accounting Pier and include functions such as accounting, payroll, City Attorney, Human
Resources, City Manager, City Council, and other City administrative functions. The
charge is based on a formula to determine the Pier's share of indirect costs. As noted
earlier, many City staff with responsibilities relating to the Pier do not charge their
time to the Pier Fund. The Indirect Cost seeks to recover a portion of these costs.
Depreciation is a non -cash expense that reflects the reduction of the value of the Pier
asset as a result of wear, age, and obsolescence.
In 2010/11 the Pier Fund was charged $390,000 in Depreciation and $375,148 for
Indirect Costs. The Pier operating deficit and general fund subsidy to the Pier for
2010/11 was $360,419.
Stakeholders have questioned the application of Depreciation and Indirect Cost
allocations to the Pier Fund and reasoned that if they were eliminated or
reapportioned to other City accounts, the Pier Fund could be seen as self- supporting
and generating an operating surplus. Nevertheless the application of Depreciation
and In Direct Cost allocation falls within conventional operating and accounting
procedures of the City -wide budgeting process.
34 v10 -14 -11 Draft
As an ongoing operating shortfall is projected, there are opportunities to reduce and
Revenue potentially eliminate operating subsidies for the Pier while improving the Pier's
Enhancement offerings to the public. Potential revenue enhancement opportunities include:
Opportunities
• Tenant Rents: Exhibit 3. lists the existing tenants, with the expiration dates for
their leases. Pier Leasing Guidelines require that the City advertise for tenants
at the expiration of the lease term, rather than offer extensions. Lease
revenue can increase upon execution of a new lease. In addition, lease rates
and vendor rates increase by the annual Consumer Price Adjustments and
other contractual increases, which will result in additional rent and common
area maintenance fees over the next two to five years. Piazza Al Mare
Restaurante at 250 Santa Monica Pier is anticipated to open by Summer 2012.
Pier Burger is expected to open at 330 Santa Monica Pier (current site of the
Surfview Cafe) in 2011. An undeveloped site currently housing the Trapeze
School NY can be made available as a permanent tenant opportunity. The City
has issued a Request for Proposals for 256 Santa Monica Pier (Rusty's Surf
Ranch site). All short -term vending cart and vending stand licenses will expire
in 2012 and present an opportunity for lease rates to be brought more in line
with market rates. However, it is difficult to predict what the range of increase
will be due to economic conditions and the uncertainty regarding new uses.
• Pier Police Substation: Relocation of the Pier substation from its high visibility
location on the Pier would allow the space to be leased to a commercial tenant
at market rate, or conversion of the northern portion of the substation
adjacent to the Municipal Pier to commercial use would generate funding and
animate an otherwise inactive facade.
• Master Planning: A possible outcome of the upcoming Pier master planning
process could be the use of some or all of the parking deck and adjacent areas
for commercial uses. The Pier Master Plan could provide the framework for
the further development of the Pier by identifying new development
opportunities, replacing parking, key policy issues, and budget and revenue
estimates.
• Pier Parking: An increase in rates for Pier Deck visitor parking and annual
permit parking could provide additional revenue to the Pier Fund. Parking rate
increases of less than 25% are exempt from Coastal Commission Development
permits.
• Gangway: Limited commercial boating operations may be possible with the
installation of the emergency gangway, now in the design stage.
Stakeholders have questioned whether a reallocation of expenses between the Beach
and Pier Funds could improve the Pier Fund's fiscal position, particularly with respect
to the Beach Fund's reimbursement to the Pier Fund for Harbor Patrol services. The
Harbor Unit currently charges the Pier Fund approximately $1.1 million annually, with
the Pier Fund reimbursed $114,000 annually from the Beach Fund, amounting to about
10 percent of the Harbor Unit's budget.
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The Pier Fund could reduce major expenditures as part of a budgetary reduction plan;
Reductions however, decreasing any of the following major expenditures would result in service
of level reductions and may also result in a decline in revenue to the Pier Fund. The
Expenditures following major expenditures include:
to the Pier • Carousel Operations: The City spends $190,588 for Carousel operations five
Fund days per week (six days per week during summer). Cost reduction could entail
reducing the number of hours or days that the Carousel is open to the public
and increasing the availability of the carousel for private rentals.
• Parking Operations: The City spends $347,387 operating the Pier deck parking
lot seven days per week from 7:30 AM to Midnight (Friday and Saturday during
the summer until 1 AM). Cost reduction could entail reducing the hours that
the parking booth is staffed or reducing staff requirements by implementing
an automated parking payment program.
• PRC: The City grants $494,900 annually to the PRC, which represents about
half of the PRC's total budget. Cost reductions could entail reducing PRC
responsibilities to be commensurate with the City's reduction in grant funding.
• Security: The City spends $1,222,342 to provide 24 -hour, 7 -day per week
Harbor Guard patrols on the Pier and adjacent beach and an additional
$240,010 for supplemental SMPD patrols. Cost reduction could entail reducing
number of staff or staffed hours and /or the City could investigate contract
services with the County Lifeguards.
• Pier Maintenance: The City spends $1,810,851 for Pier maintenance, supplies,
and custodial and maintenance contracts. Cost reduction could entail reducing
custodial service levels, and limiting or deferring maintenance contracts.
38 v10 -14 -11 Draft
Over the last five years the PRC's annual budget has averaged approximately $1 million to
PRC fund its operations. Exhibits 11. and 12. include the PRC balance sheet for June 30, 2011 and
Operational detailed revenues and expenditures for FY 2010/11. For FY 2010/11 the PRC had a net
Revenues operating income of $139,812
and Costs In addition to the City funding, other income is earned from private sources.
• Sponsorship, Promotions, and Licensing Revenues: The City permits the PRC to
develop and manage sponsorships, promotions and licensing activities to generate
additional revenue, including corporate sponsorships to support PRC events and
programing. To date, the PRC spends more resources defending the Pier trademark
than they generate in licensing it. In FY 2010/11 the PRC earned $297,000 from
sponsorship and promotions.
• Events and Filming: The City permits the PRC to manage and collect revenue for
special events and filming on the Pier Deck. The PRC sets the rates and retains the
event fees. In addition, the PRC collects and transmits to the City a special event
application fee of $50 to $200, parking deck fees (three times the daily rate --
approximately $3,500 for half -lot) and any other fees for city services. In FY 2010/11
the PRC earned $170,000 from special events and film shoots. The PRC policy has
been to limit special event programming on the parking deck to 'off season' or
'shoulder seasons' with the exception of TDS which occurs during the Pier's peak
season.
• Donations: The PRC can implement special donation campaigns from individuals or
community groups, including the 2010 campaign for TDS.
• Sale of Merchandise: The PRC offers Santa Monica Pier commemorative products
including books, apparel, and glassware. In FY 2010/11 the PRC earned $4,897 from
product sales through its website and at TDS.
Budget expenditures are primarily comprised of salaries, benefits and general administration
which represents 62 percent of the PRC's expenses Production costs for PRC produced
community events, primarily the Twilight Dance Series, account for 29 percent of budgetary
expenditures. Other expenses include costs related to Carousel booking services, and costs
associated with the coordination of private events.
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2010 -2011
PRC REVENUES
City Grant
$494,900
Merchandise, 100th Anniversary, Interest Income
$11,878
Filming
$73,429
Promotion
$141,100
TDS
$172,603
Paddleboard Contest
$24,780
Carousel Rental
$107,661
Private Events on Pier Deck
$95,667
Total PRC Revenues
$1,122,018
PRC EXPENSES
Salaries and Wages
$397,884
General Expenses
$207,110
TDS
$247,443
Carousel (includes payment to City)
$65,241
Paddleboard Contest
$27,541
Private Events on Pier /Parking Deck
$28,956
Movie -Drive In
$8,030
Total PRC Expenses
$982,205
PRC SURPLUS /(DEFICIT)
$139,813
CITY PIER FUND and PRC COMBINED
SURPLUS /(DEFICIT)
($220,507)
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Disadvantages
• As Pier - related responsibilities are spread among several divisions and
of Current
departments of the City, it can be difficult for the PRC and other Pier stakeholders
Approach
to navigate through the City's systems to achieve desired results. The priority of
the Pier's and PRC's needs and desires can vary among different City divisions.
• There can be confusion within the City as to who has the responsibility and
authority to make decisions that affect the Pier. The City's fractured management
of the Pier can make it difficult for the public, PRC staff and even City staff to
know who has ultimate responsibility for the Pier.
• The PRC's decision - making structure of committee review and recommendation,
followed by Board review and approval, can be perceived as slow and duplicative.
• There are inconsistencies between the Services Agreement and Leasing
Guidelines with regards to negotiation of leases in that the Services Agreement
states the PRC is not to negotiate leases and licenses, while the Leasing Guidelines
provide the PRC with opportunity to do so. These discrepancies create confusion
regarding the appropriate roles of the PRC and the City with respect to leasing
and licensing.
• Routine decisions regarding Pier management and leasing issues can be
politicized.
• The PRC committee structure has a tendency to lead the body to micro - manage
maintenance and operations of the City staff.
• The City's delegation of responsibility to the PRC can mask clear accountability for
the Pier, a major public asset.
• The PRC staff has authority over contracts, purchases and personnel decisions
that do not require PRC board approval, let alone City Council approval.
• Location fees charged by the PRC for filming, promotions, special events are not
approved by the Board or Council and may warrant upward adjustment following
a survey of comparable venues. Only Carousel room rental fees are set by Council.
• While the PRC's system for procuring products and services allows it be nimble,
the system may not comply with best practices associated with public assets.
• The City's oversight of PRC activities is limited to City Council's annual approval of
the PRC budget and work plan.
• While individual Board members are able to independently seek out information,
there have been instances where City and PRC staff have felt that individual Board
members have attempted to exert inappropriate interference with staff
responsibilities.
• The PRC's need to raise revenue through sponsorships and events to support its
operations causes some tenants to believe that the PRC prioritizes revenue -
generating events over tenants' needs.
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Alternative Management Scenarios
The five municipal public piers and the other public venues surveyed in the "Managing Our Public Spaces"
suggest alternate models for governance that could inform management decisions for the Santa Monica Pier.
Scenario 1: City Manages All Pier Operations
In scenario 1, the City would dissolve the PRC and bring most or all services 'in- house'. Key
elements of this approach include:
Consolidation of Pier management: Rather than dispersing management and
operational duties and decision - making among various City departments and the
PRC, the City could designate one entity within the City to take responsibility for
overall stewardship of the Pier. For greatest success, that entity would need to be
located at the Pier to perform day -to -day activities of managing the Pier (coordinate
special events, filming, street performer monitoring, communicating with tenants)
and be responsible for coordinating with other City departments whose activities
affect Pier operations (construction, maintenance, custodial services, parking
operations, special events, permitting, leasing).
District -wide management of the Pier and Beach: The City entity with chief
responsibility for the Pier would need to work closely with, or be part of, the City's
beach management responsibilities. To enhance public participation, the City could
appoint an advisory commission to review and make recommendations to the
Council on Pier or Beach issues or the City could task an existing commission with
these responsibilities.
Leasing based on best practices: To ensure that tenant issues, including leasing, are
administered in a professional manner that limits the need for Council intervention,
leases consistent with Council- approved guidelines could be authorized and
executed by the City Manager, as is the case with Airport leasing. Only leases that
did not conform to the Guidelines would require Council approval. As in other
governance scenarios, changes to the leasing process should be considered so that
the City can pay broker commissions or retain leasing consultants, the advertising
and marketing process can be streamlined, and leases can be negotiated based on
up -to -date practices and policies. While the up -front costs for leasing may be
increased, the benefits to the Pier are expected to outweigh the additional costs.
Special event management: The City could assume responsibility for production of
Pier community events such as the Twilight Dance Series. Expertise for production
of community events exists within the City's Community and Cultural Services
Department (CCS) that currently produces large and small - scale public events with
in -house staff or with contract producers including Glow, Santa Monica Festival, and
Jazz on the Lawn concert series. Other divisions within CCS provide venue
management and regularly provide special event services at public facilities.
Additional staff and appropriate funding to retain event producers would be
necessary.
Sponsorship: Responsibility for securing sponsorships for major community events,
such as the Twilight Dance Series, consumes a significant amount of time of PRC staff
46 v10 -14 -11 Draft
management of the Pier to ensure that the new entity properly balances
competing pressures to generate revenue through private events, to produce
community events, to cooperate with other non -Pier community initiatives and to
be attentive to the interests of Pier tenants. The City would need to audit the non -
profit's activities frequently to ensure that transparency and accountability are
maintained and public objectives are satisfied.
• Delegation of authority within the City: The City Manager would need to delegate
responsibility for stewardship of the Pier to one entity within the City who would
be responsible for overseeing the services agreement and coordinating between
the non - profit and all City departments, including Public Works for capital project
implementation.
Leasing: In addition to communicating with tenants about events and conditions
on the Pier, the non - profit's staff and consultants would be responsible for tenant
relations, including enforcement of lease requirements, proper adjustments of
rent and CAM charges, imposition of late and returned check fees, collection of
monies and conformance with other lease provisions. Tenant recruitment, lease
management, as well as lease negotiations, would likely require the non - profit to
acquire additional staff and consultant expertise.
Fiscal impact: If the non - profit were to take over existing City responsibilities, the
non - profit would require funding for these additional responsibilities above that
currently provided to the PRC. This could be achieved by transferring the amount
the City currently budgets for the services, while retaining enough revenue to
offset the costs for oversight and coordination of the services agreement with the
non - profit. Costs for the non - profit to provide these services could be lower than
the City's costs if the non - profit's employees did not receive the full -range of
benefits that City employees receive.
Given that the City's costs to operate the Pier are closer to $5,000,000 annually, it is
questionable whether the funds available to be transferred to the non - profit entity would
be sufficient to fully manage the Pier.
Another approach would be to authorize the non - profit to receive a share of revenues
generated on the Pier. Payment could be structured whereby the City retains all Pier
rental revenues based on a certain benchmark year and the non- profit receives a
percentage of all revenue increases.
Scenario 3: Non - profit Entity Focused on Marketing, Events and Fundraising
Under Scenario 3, a non - profit entity would focus its efforts solely on marketing, street
performer management, promotions, and special events. The non - profit entity's
responsibilities could encompass the Pier and the Beach. The PRC could serve this
function, a new entity could be created, or an existing entity, such as Downtown Santa
Monica, Inc. or the Santa Monica Convention and Visitors Bureau, could assume these
responsibilities and the associated budget. The board, commussuib or a limited -term task
force could be responsible for advising the Council on key issues facing the Pier and Beach
48 v10 -14 -11 Draft
grant to the PRC, as PRC would no longer need staff for production of community
events, which now consumes a significant amount of PRC staff time prior to the
summer and throughout the duration of the event. The entity would retain
location fees from filming, special events and promotions as it would continue to
retain responsibility for its core responsibilities (marketing, street performer
management, coordination of special events, and coordination of filming).
Concerns about leasing, maintenance and parking that would have an effect on
this new entity's ability to market and promote the Pier and the special events
would be coordinated by the City's designated delegate. The City would
designate an entity to produce and find sponsors for community events such as
the Twilight Dance Series.
Scenario 4: Master Ground Lease with Private Entity
Under Scenario 4, the City would engage the expertise and capital of the private sector
and enter into a long -term ground lease with a Master Lessee who would be responsible
for most Pier operations and for commercial development of the Pier under a
Development Agreement /Master Lease Agreement. The City would relinquish control
over certain aspects of the Pier as the Master Lessee would be responsible for functions
ranging from marketing to maintenance, to production of community events, to security
and possibly capital improvements. The Master Lessee could be assigned responsibility
for managing existing leaseholds or acquire leaseholds of tenants it views as
underperforming and reposition them to maximize revenues. Key elements of this
approach include:
• Community objectives: An agreement with a master lessor would need to balance
commercial interests, including acceptable levels of special events, with the need
to ensure and protect the public's interests in the Pier regarding public access,
community events, tenant mix, and other community activities.
Completion of master planning efforts: A master lease for the Pier would be more
competitive if some of the unknowns about the future of the Pier's operation
were resolved. As an example, a Pier Master Plan could provide for removal of
Pier deck parking, which could open the way for new commercial opportunities.
Coastal Commission approval of the long -term Master Plan would provide
assurance about potential leasing opportunities.
Privatization of public sectorjobs. A variety of City jobs may need to be
eliminated in favor of services to be provided by the Master Lessee.
The Pier within the District: Ground - leasing the Pier to a private entity could set
up conflicts between the private and public sectors. Under a master lease, the Pier
would operate as a distinct venue that would need to coordinate with events and
activities occurring on the beach and in the downtown area. Negotiations would
need to preserve the City's right to manage adjacent properties for the
community good without restrictions as to impact on the Pier's revenue
generation.
Fiscal impact: Master ground leases are often negotiated based on a percentage
of revenue to be generated through the investment, providing benchmarks for
50 v10 -14 -11 Draft
52
Chart 1. Comparative Pier Management Models
3 acre historic wooden pier -..
2,745 foot historic wooden
70,000 sf (1,550-foot-long) Pier was
The Wharf was purchased by the
2 level center featuring over 124.
9 acre historic wooden pier -built in
dates back to 1872. Features.
pier -built 1913. Features
originally built in 1889. In 1995,
City of Monterey in 1916 and has
tenants - retail shops, restaurants,_ -
1909. 2,000 foot long. Features
restaurants, retail, fishing,
restaurants, retail, outdoor
following a fire the horseshoe shaped
since been reconstructed several
arcade, street performances, marine
amusement park, arcade,
boating and marine education
fresh fish markets, fishing, .
r pier was repaired and reopened. 50 l
times. Offers restaurants, fish -'
center, aquarium, live theater,
restaurants, retail, aquarium,
facility. Approx 2 million visitors-
boating, and kayaking: Approx
- dining, entertainment, retail and
markets, art and gift shops, fishing,
- amusement rides, cruises. 200,000 sf
trapeze school, street performers.
per year.
3 million visitors per year.
'. bait /tackle merchants. `
boating, and theater. 35
gross leasable areas. Approx 105
129,111 sf of leased /licensed area.
'.
concessions and 24 separate leases.:.
million visitors per year.
Approx 6 million Visitors per year.
oter.:i City Council with typical delegation - Pier 39 Management Co. LP < City Manager with authorization
to Mayor and /or City Manager. from the PRC
tthe
Joe
v1D -14 -11 Draft
City City— City Tenants are responsible for Pier 39 Management Co. LP City -
structure underneath them down to
- the tidelands, City is responsible for
structure and supports in public
Fight of way /common areas
Fund General Fund triterprise Funtl benerai funs
54 v10 -14-11 Draft
Parking Fund Private Enterprise Fund
56 v10 -14 -11 Draft
City. manages Carousel City .(contracted) Nonprofit could manage both City manages Carousel operator and Master Lessee
operator and ticket revenues. Carousel operations and special event ticket revenues. Non Profit or
PRC manages. Carousel parties ' bookings. contractor manages Carousel parties.
and special events and and special events and receives a
'.:receives a commission. commission.
-ury stair, rmance varrcing -ury t
(Operations Div
Landscape Div
r Master Lessee
.profit could manage maintenance uty... Master Lessee
repairs
58 v1D -14 -11 Draft
Exhibit 1.
I 7+ I •,p � � +�
EXPENDITURES BY YEAR
FY 2000/1 to 201
TOTAL CIP EXPENDITURES 2000 -2011 12,364,246.76
rtl�
Account
Description
Expenditure
C30055799
NEW CITY ACCOUNTING SYS SOFTWR
1,708.00
C30055799
C30000301
COMPUTER EQUIP REPLACE PROG
8,892.00
COMPUTER EQUIP REPLACE FROG
C30071501
PARKING REVENUE EQUIPMENT
32,554.00
86,135.00
C30016701
FLEETVEHICLE REPLACEMENT FROG
224,628.00
C30093001
C30008598
CITY FACILITY MAINTENANCE
9,919.00
BREAKWATER ENVIOR ANALYSIS
C30008599
CITY FACILITY MAINTENANCE
35,612.97
40.08
C30093001
PIER BLDG & SIGNAGE UPGRADES
7,187.40
C30093498
030093296
BREAKWATER ENVIOR ANALYSIS
20,700.47
PIER CAROUSEL BUILDING
C30093498
PIER CNTRL RESTROOM REPLACEMEN
761.54
59.83
C30008192
total
341,963.38
C30008198
rr� ►:
Account
Description
Expenditure
C30055702
STARS SOFTWARE IMPLEMENTATION
3,382.00
C30055799
NEW CITY ACCOUNTING SYS SOFTWR
4,767.00
C30000302
COMPUTER EQUIP REPLACE FROG
8,892.00
C30016702
FLEETVEHICLE REPLACEMENT FROG
86,135.00
C30008599
CITY FACILITY MAINTENANCE
106,637.24
C30093001
PIER BLDG & SIGNAGE UPGRADES
25,440.40
030093296
BREAKWATER ENVIOR ANALYSIS
18,094.96
C30093299
BREAKWATER ENVIOR ANALYSIS
40.08
C30093399
PIER EMERGENCY GENERATORS
10,294.00
C30093498
PIER CNTRL RESTROOM REPLACEMEN
567.63
C30093902
PIER CAROUSEL BUILDING
49,957.38
C30008101
PERCENT FOR ARTS
59.83
C30008192
PERCENT FOR ARTS
2,592.00
C30008198
PERCENT FOR ARTS
4,937.82
total
321,797.34
Exhibit 1.
Account
Description
Expenditure
1530000306
COMPUTER EQUIP REPLACE PROG
9,000.00
IS300006OG
TELECOMMUNICATIONS SERVICES
9,920.00
IS300167
FLEETVEHICLE REPLACEMENT PROD
35,831.00
0300934
PIER RESTROOM /MULTIUSE FACILIT
789.60
M300645
PIER STRUCTURAL REHAB /REPAIR
1,382,794.39
C300655
BIG PIER BRIDGE IMPROVEMENTS
42,181.93
C300081
PERCENT FOR ARTS
5,410.34
1,485,927.26
2006/07
Account
Description
Expenditure
1530000307
COMPUTER EQUIP REPLACE PROG
6,400.00
IS30000607
TELECOMMUNICATIONS SERVICES
9,920.00
IS300167
FLEETVEHICLE REPLACEMENT PROG
35,690.00
C300426
1600 OCEANFRONT AVE(HEAL BAY)
281,089.62
C300934 -
PIER RESTROOM /MULTIUSE FACILIT
56,221.51
C300375
250 SANTA MONICA PIER
8,654.01
M300645
PIER STRUCTURAL REHAB /REPAIR
2,658,316.88
C300655
BIG PIER BRIDGE IMPROVEMENTS
9,981.84
3,066,273.86
2007/08
Account
Description
Expenditure
IS30000308
COMPUTER EQUIP REPLACE PROG
6,400.00
IS30000608
TELECOMMUNICATIONS SERVICES
9,920.00
IS300167
FLEET VEHICLE REPLACEMENT PROG
35,690.00
C300934
PIER RESTROOM /MULTIUSE FACILIT
191,056.02
M300645
PIER STRUCTURAL REHAB /REPAIR
175,401.74
P300645
PIER INFRASTRUCTURE ASSESSMENT
273,351.30
C300655
BIG PIER BRIDGE IMPROVEMENTS
16,296.07
708,115.13
2008/09
Account
Description
Expenditure
1530000309
COMPUTER EQUIP REPLACE PROG
6,400.00
IS30000609
TELECOMMUNICATIONS SERVICES
9,920.00
M304012
WURLITZER ORGAN REFURBISHMENT
22,164.00
M304013
CAROUSEL DOME REPAIR
2,627.57
C300934
PIER RESTROOM /MULTIUSE FACILIT
2,315,684.56
M300645
PIER STRUCTURAL REHAB /REPAIR
74,456.20
Exhibit 2.
PLANNED CAPITAL IMPROVEMENTS PROJECTS
FY 20011/12 to 2015/16
City staff has submitted the following capital projects for the Santa Monica Pier over the next five years
Project
FY 11 -12
FY 12 -13
FY 13 -14
FY 14 -15
FY 15 -16
Total
Phase IV
$674,200
$674,200
Carousel Floor and
Substructure
$841,000
$841,000
Pier Stairs and Ramp
$260,000
$260,000
Newcomb Deck
$3,147,054
$3,338,709
$2,512,955
$8,998,718
Pier Master Plan
$200,000
$250,000
$450,000
Lighting Upgrades
$290,000
$274,000
$227,715
$791,715
Pier Furniture
$184,700
$184,700
Total
$934,200
$4,188,054
$540,000
$3,797,409
$2,740,670
$12,200,333
Exhibit 4.
Type of Rental
Number of Events
Children's Birthday Parties
150
Private
21
Semi - Private
1
Filming
11
Total
183
Exhibit 6.
MOM
Type of Shoot
Number of Shoots
Commercial Filming
33
Stills
30
Man on the Street interviews
8
Non Profit
4
Student Film
2
Personal Use /Portfolio
2
Industrial Video
1
Total
80
Exhibit 8 -A.
PRC Responsibilities For Twilight Dance Series (TDS): The PRC contracts with Rum & Humble, Inc. to produce the
event as talent buyer, talent manager, stage manager and production manager. Tasks not within the scope of work
of consultant are provided by PRC staff. PRC retains a consultant to provide assistance with securing TDS
sponsorship under a commissioned based sales /sponsorship contract. PRC contracts with Chrysalis for'day of
event' labor and also utilizes a small number of volunteers. All PRC staff pitches in to assist with TDS.
PRC employees and TDS related responsibilities:
Staff Name
TDS Responsibilities
Other Events FY 2010/11
Executive
Oversees management contracts and fundraising efforts for TDS.
10 Twilight Dance Series
Director
Coordinates with PRC Board and TDS Subcommittee.
Concerts
TDS Workload %:
From January to the first concert Executive Director spends 40%
to 50% of time on TDS. During the series Executive Director
spends 70% on TDS.
Deputy
Manages all special events including PRC produced events such
PRC Produced Events:
Director
as TDS, privately produced events, and carousel event rentals;
In addition to 10 TDS Concerts,
coordinates with City's Events Team. In general approximately
4 Drive -In Movies, 1
80% of time is spent on special event coordination and Carousel
Paddleboard Race
rentals.
Private Events:
TDS Workload %:
15 private events
From January to the first concert Deputy Director spends 30% of
time on TDS. During the series Deputy Director spends 100% on
Carousel Rentals:
TDS. -
150 Children's birthday parties,
21 private parties, 11 filming
Operations
Manages all filming on the Pier. 75% of time is spent on Filming
80 commercial filming and still
Manager
and Photography.
photography shoots
TDS Workload %:
From January to the first concert Operations Manager spends
30% of time on TDS. During the Series Operations Manager
spends 30% on TDS.
TDS Workload %:
14 promotions /sampling
From January to the first concert Marketing Manager spends
events
Marketing
60% of time on TDS. During the series the Marketing Manager
Manager
spends 100% on TDS
TDS Workload %:
Administrative
From January to the first concert Administrative Assistant
Assistant
spends 30% of time on TDS. During the series the Administrative
Assistant spends 50 %- 60% on TDS.
Weekend
TDS Workload:
Activities
Day of the Event 100 %. Supervises Chrysalis workers.
Coordinator
Exhibit 9.
REVENUE SUMMARY - PIER FUND
- --
144,639
2008 -09 Prior
2009 -10 Last
2010 -11 This
2011 -12 Next
2012 -13
Account
Description
Year Actual
Year Actual
Year Actual
Year Budget
Estimated Budget
Fund 20
Miscellaneous Grants Fund
292,000
296,000
108,013
400820
PIER GRANT -100TH ANNIVERSARY
43,794
41,487
0
0
0
Fund 30 Pier Fund
401830 VENDOR RENT
402010 SM PIER- RENTAL
402020 SM PIER- PARKING LOTS
402030 CAROUSEL OPERATION
Carousel Ticketing
Carousel Events
402040 SM PIER - OTHER REVENUES
402550 INT DEP / INVESTMENT
40255A UNREALIZED GAIN / LOSS
402558 ACCRUED INVESTMENT INCOME
40255C AMORT /ACCRET
404610 PROMOTIONAL FEES
405170 CAM FEES
408000 INTERFUND SERVICES
TOTAL
180,958
144,639
176,156
207,611
211,290
1,693,731
1,861,506
2,730,311
2,528,803
2,621,682
1,049,174
1,222,155
1,149, 239
1,040,000
1,040,000
292,000
296,000
108,013
129,592
170,944
192,276
Harbor Unit
50,684
.....41639*
45,084
973,325
1,014,824
22,080
7,053
1,631,159
0
0
245,704
170,077
122,172
0
0
107,363
8,101
(60,883)
0
0
(37,693)
(15,017)
(36,548)
0
0
(53,548)
(5,040)
47,566
0
0
42,329
42,914
44,078
43,802
45,054
285,015
291,365
299,076
300,303
305,152
150,569
112,408
114,086
150,695
157,702
3,844,380
3,969,853
6,432,450
4,563,214
4,676,880
TOTALALL REVENUES 3,888,174 4,011,340 6,432,450 4,563,214 4,676,880
*$26,185 of 2009 -10 total for Carousel Events was paid in 1st qtr 2011 -12 due to payment oversight from Nov. 09 -April 10
"Vendor Rent" and "SM Pier Rental" represent the rents paid by Pier lessee and licensees
"SM Pier Parking Lot" encompasses both general parking fees and special event rental ofthe parking deck
"Carousel Operations" includes ticket sales and special event rentals
"SM Pier - Other Revenues" accounts for one -time revenues such as the $1.6 million transfer premium associated with the Pacific Park sale reflected in FY
2010 -11
"Promotional Fees and CAM Fees" are additional fees stipulated in certain leases used to offset City's expenditure on common area maintenance and other
expenses
"Int Dept /Investments' reflect interest paid on investments - primarily unspent capital improvement funds
Nmerfund Services" reimburses the Pier fund from the Beach Fund for Harbor Guard patrols performed on the beach and beach parking lots.
EXPENDITURE SUMMARY - PIER FUND (As of 8/17/2011)
* 01b i1 t seer "eclattort;Eicpengels Esftm ", t d`t(i,fora(,;2Eiix *1.Z and 20i i peprociat ¢unAs,not'irr+rfudeii;irr
1
2008 -09 Prior
2009 -10 Last
2010 -11 This
2011 -12 Next
2012 -13
Description
Year Actual
Year Actual
Year Actual
Year Budget
Estimated Budget
Salaries and Wages
EDD
119,912
210,538
173,363
182,705
192,276
Harbor Unit
1,018,739
985,928
1,048,171
973,325
1,014,824
Maintenance
558,824
547,693
592,532
578,683
602,296
All Salaries and Wages
1,697,475
1,744,160
1,814,066
1,734,713
1,809,396
Supplies and Expenses
-
EDD
2,327,510
2, 055, 250..-
, 119'55;i35�'"? -:.
"' 'I „1�5{}8�24'2
1,532,928
Harbor Unit
160,976
175,533
174,171
145,442
150,676
Maintenance
907,020
1,144,714
1,218,319
1,365,857
1,407,543
All Supplies and Expenses
3,395,505
3,375,497
3,347,545
3,019,541
3,091,147
Combined Salaries /Wages & Supplies /Expenses
EDD
2,491,216
2,307,275
2,128,417
1,690,947
1,725,204
Harbor Unit
1,179,715
1,161,462
1,222,342
1,118,767
1,165,500
Maintenance
1,465,844
1,692,407
1,810,851
1,944,540
2,009,839
I Ali Combined
5,136,775
5,161,144
5,161,610
4,154,254 ;
4,900,543
* 01b i1 t seer "eclattort;Eicpengels Esftm ", t d`t(i,fora(,;2Eiix *1.Z and 20i i peprociat ¢unAs,not'irr+rfudeii;irr
1
EXPENDITURE DETAILS - PIER FUND (As of 8/17/2011)
Account
Description
2008 -09 Prior Year
Actual
2009 -10 Last Year
Actual
2010 -11 This Year
Actual
2011 -12 Next Year
Budget
2012 -13 Estimated
Budget
HARBOR UNIT
INVENTORY ISSUES
878
789
813
979
** Salaries
and Wages
CONFERENCES /MEETINGS/TRAVEL
9
28
0
100
511000
PERMANENT EM PLOYEES
397,044
397,484
420,735
580,122
600,125
51100H
YEAR -END CASH OUTS
7,829
10,496
9,595
0
0
511010
ESTIMATED PAY RAISE
0
0
0
0
0
511030
DIVE PAY
9,075
8,325
9,075
16,200
16,200
511490
OVERTIME
124,885
79,521
85,706
22,182
22,880
511500
TEMPORARY EMPLOYEES
263,172
262,339
247,868
98,956
101,967
511713
MEDICARE -MISC EMPLOYEES
11,570
11,231
11,532
10,137
10,532
511730
WORKERS'COMP INSURANCE
40,900
45,200
47,200
17,444
17,444
511743
MEDICAL -MISC. EMPL
55,643
59,827
62,555
86,456
96,831
511746
MED TRUST -MISC. EMPL
10,224
10,224
10,224
11,928
11,928
511748
DENTAL
4,660
5,231
5,775
6,955
7,568
511749
VISION
827
832
834
9S9
973
51174E
EMPLOYEE HEALTH CONTRIBUTION
0
0
(1,904)
(4,322)
(4,842)
511773
RETIREMENT -MISC. EMPL
85,527
83,476
125,945
110,477
116,694
511774
RETIREMENT -AS NEEDED
0
0
0
3,710
3,824
511920
UNIFORM /TOOLALLOWANCE
3,630
4,185
6,571
3,600
3,600
51197A
UNEMPLOYMENT
0
3,571
2,363
3,214
3,321
511978
PAP
613
627
628
730
742
51197C
DCAP
0
0
0
434
434
51197E
LIFE INSURANCE & AD & D
281
243
192
770
801
51197F
DISABILITY INSURANCE
2,860
3,116
3,277
3,373
3,802
Salaries and Wages
1,018,739
985,928
1,048,171
973,325
1,014,824
** Supplies and Expenses
522310
OFFICE SUPPLIES /EXPENSE
1,114
978
901
1,000
1,200
522330
INVENTORY ISSUES
878
789
813
979
979
522820
CONFERENCES /MEETINGS/TRAVEL
9
28
0
100
100
522900
MEMBERSHIPS AND DUES
290
0
902
242
242
522910
VEHICLES - FUELS /LUBRICATION
16,288
12,634
11,694
8,680
8,680
522920
VEHICLES - REPAIRS
898
0
0
1,449
1,449
522940
VEHICLES - INSURANCE
1,700
1,900
2,000
0
0
533020
GENERAL LIABILITY /AUTO
35,700
35,400
37,800
2,637
2,724
533030
PROPERTY INSURANCE
0
0
0
1,637
1,719
533040
SPECIAL INSURANCE
0
0
0
860
903
533120
SPECIAL EQUIP MAINT
385
0
526
1,155
1,155
533140
BOAT MAINTENANCE /OPERATION
20,274
20,341
20,517
21,819
21,819
533220
BLDG / STRUCTURE MAINTENANCE
6,288
7,113
8,010
7,609
7,609
533240
PIER MAINTENANCE
12,423
14,569
15,417
16,499
16,499
544010
SPECIAL DEPARTMENT SUPPLIES
8,278
16,550
13,023
11,318
13,112
544030
BADGE /AWARD /NAMEPLATES
0
0
0
100
100
544090
MEDICAL/FIRSTAID SUPPLIES
3,026
1,528
2,311
3,305
3,305
544120
PERIODICALS -
139
144
48
220
220
544170
UNIFORM / PROTECTIVE CLOTHING
.3,189
359
215
3,061
3,061
544340
INDIRECT COST ALLOCATION
48,358
62,632
58,781
60,544
63,572
555210
TRAINING
1,739
570
1,213
2,228
2,228
Supplies and
Expenses
- 160,976
175,533
174,171
145,442
150,676
Salaries and Wages
1,018,739
985,928
1,048,171
973,325
1,014,824
Supplies and Expenses
160,976
175,533
174,171
145,442
150,676
Total
1.179,715
1,161,462
1.222.342
1.118.767
1.165.500
2 of
Exhibit 11.
Santa Monica Pier Restoration Corporation
Balance Sheet
June 30, 2011
ASSETS
Current Assets
Cash - Onewest Bank
$150,861.15
Cash - Union Bank
764.17
Accounts Receivable
123,619.00
Prepaid Expenses - TDS 2011
64,837.48
Other Prepaid Expenses
21,731.75
Total Current Assets
$361,813.55
Fixed Assets
Portable Stage
$107,442.64
Christmas Decorations
52,540.37
Tents and Tables
6,053.21
Furniture
12,317.20
Office Equipment
18,777.73
Accumulated Depreciation
(73,818.O1
Total Fixed Assets 123,313.14
TOTALASSETS
LIABILITIES AND FUND BALANCE
Current Liabilities
Accounts Payable
$ 65,131.84
Prepaid Revenue - City of SM
Prepaid Revenue - Carousel
6,092.00
Prepaid Revenue - TDS 2011
224,500.00
Accrued Vacation Pay
12,770.56
Deposits - Events
11,000.00
Deposits - Filming'
3,100.00
Deposits - Carousel
700.00
Total Current Liabilities $ 323,294.40
Fund Balance
Unrestricted Net Assets $ 23,810.16
Audit Adjustments (1,790.42)
Current Year Net Income 139,812.55
Total Fund Balance 161,832.29
TOTAL LIABILITIES AND FUND BALANCE
See Accountant's Compilation Letter
James B. Parr CPA Inc.
$ 485,126.69
$ 485,126.69
See Accountant's Compilabon Letter .
James B. Parr CPA Inc.
Annuat
Budget
$ 494,900.00
96,000.00
64,000.00
8,00000
$ 662,900.00
Exhibit 12.
Santa Monica Pier Restoration Corporation
General
and Administrative Revenue and Expenses
July 1, 2010 to June 30, 2011
June 2011
Year to Date
Actual
Sudoet
Variance
Actual
Budoet
Variance
REVENUE
General & Administrative
City Funds
$ 41,241.66
$ 41,242.00
$ (0.34)
$494,900.00
$494,900.00
$ -
Donations
-
Sales
180.00
180.00
2,231.67
2,231.67
100th Anniversary
600.00
600.00
9,244.00
9,244.00
Filming Revenue
3,500.00
6,000.00
(2,500.00)
73,429.00
96,000.00
(22,571.00)
Promotion Revenue
5,333.00
(5,333.00)
141,100.00
64,000.00
77,100.00
Licensing
667.00
(667.00)
8,000.00
(8,000.00)
Interest Income
54.48
54.48
402.34
402.34
Total Revenue
$ 45,576.14
$ 53,242.00
$ (7,665,86)
$721,307.01
$662,900:00
$ 58,407.01
See Accountant's Compilabon Letter .
James B. Parr CPA Inc.
Annuat
Budget
$ 494,900.00
96,000.00
64,000.00
8,00000
$ 662,900.00
General and Administrative
Revenue
Expenses
Net income
Twilight Dance Series
Revenue
Expenses
Net Income
Exhibit 12.
Santa Monica Pier Restoration Corporation
Summary of Revenue and Expenses by Category
July 1, 2010 to June 30, 2011
June 2011 Year to Date
Actual Budget Variance Actual Budget Variance
$ 45,576.14 $ 53,242.00 $ (7,665.86)
60,598.91 46,168.00 (14.430.91)
$ (15,022.77) $ 7,074.00 $ (22,096.77)
0.00 0.00
$ 721,307.01 $ 662,900.00 $ 58,407.01
604,994.11 563,900.00 (41,094.11)
$ 116,312.90 $ 99,000.00 $ 17,312.90
$ 172,603.07 $ 150,000:00 $ 22,603.07
247,443.01 380,000.00 132, 556.99
$ (74,839.94) $ (230,000.00) $ 155,160.06
Annual
Bud et
$ 662,900.00
563,900.00
$ 99,000.00
$ 150,000.00
380,000.00
$ (230,000.00)
Carousel
Revenue $ 6,414.00 $ 8,417.00 $ (2,003.00) $ 107,661.16 $ 101,000.00 $ 6,661.16 $ 101,000.00
Expenses 2.657.39 3.750.00 1,092.61 65,240.79 45,000.00 (20,240.79) 45,000.00
Net Income $ 3,756.61 $ 4,667.00 $ (910.39) $ 42,420.37 $ 56,000.00 $ (13,579.63) $ 56,000.00
Paddle Board
Revenue
Expenses
Net Income
Outside Events
Revenue
Expenses
Net Income
$ 11,335.89 $ 25,000.00 $ (13,664.11)
18.959.21 6,040.79 (12.918.42)
$ (7,623.32) $ 18,959.21 $ (26,582.53)
$ 24,779.97 $ 35,000.00 $ (10,220.03)
27,541.27 35,000.00 7,458.73
$ (2,761.30) $ - $ (2,761.30)
$ 16,724.00 $ 7,917.00 $ 8,807.00 $ 95,666.55 $ 95,000.00 $ 666.55
123.70 1667.00 1,543.30 28,955.70 20,000.00 (8955.70)
$ 16,600.30 $ 6,250.00 $ 10,350.30 $ 66,710.85 $ 75,000.00 $ (8,289.15)
See Accountant's Compilation Letter
James B. Parr CPA Inc.
$ 4000.00
$ 35;000.00
$ 95,000.00
20,000.00
$ 75,000.00
Exhibit 12.
Santa Monica Per Restoration Corporation
Twilight Dance Series Revenue and Expenses
July 1, 2010 to June 30, 2011
June 2011
Year to Date
Annual
REVENUE Actual Budget Variance
Actual
Budget
Variance
Budget
Sponsorships
$
141,225.24
Grants
5,000.00
Wine Garden
21,439.20
Sales
2,666.85
Donations
2,271.76
Total Revenue $ $ $
$
172,603.07
$ 150,000.00
$ 22,603.07
$ 150,000.00
EXPENSES
Advertising
$
18,889.59
Parking
2,000.00
Licenses
668.94
Security
17,478.50
Sound System
31,191.52
Banners
6,065.14
Shirts
4,910.68
Fencing
1,011.63
Setup/Takedown
8,372.52
Producer Fees
80,827.69
Photography
700.00
Food
3,680.68
Fire Permit
1,625.16
Wine Garden
21,046.11
Police Fees
40,351.33
Recycling Bins
2,700.00
Equipment Rental
3,569.51
Office Expenses
201.84
Postage
483.75
Miscellaneous
1.668.42
Total Expenses $ $
$
247,443.01
$ 380 000.00
$132,556.9
$ 380,000.00
Net Income $ $ $
$
(74,839.94)
$ (230,000.00)
$ 155,160.06
$(230,000.00)
See Accountants Compilation Letter
James B. Parr CPA Inc.
Exhibit 12.
Santa Monica Pier Restoration Corporation
Paddle Race Revenue and Expenses
July 1, 2010 to June 30, 2011
Year to Date
Actual Budget Variance
$ 7,479.97 $
1,825.00
15.475.00 $ 35,000.00
$ 24,779.97 $ 35,000.00 $ (10,220.03)
$ 3,129.72
. 193.00
4,000.00
5,511.87
25.00
400.00
1,802.00
3,049.52
83.76
820.99
512.00
250.00
317.10
125.00
595.00
350.00
3,397.28
1,079.44
1,899.59
$ 27,541.27
$ 35,000.00
$
June 2011
REVENUE
Actual
Budget
Variance
Entry Fees
$
5,510.89
Exhibitor Fees
1,825.00
Sponsorships
4,000.00
$ 25,000,00
Total Revenue
$
11,335.89
$ 25,000.00
$ (13,664.11)
EXPENSES
Advertising
$
1,589.84
Fire Permit
Donations
2,500.00
Supplies
1,712.01
Office Expense
Security
400.00
Sound System
1,802.00
Banners
3,049.52
Fencing
83.76
Setup/Takedown
820.99
Photography
512.00
Master of Ceremonies
250.00
SM Police Fees
317.10
Trash /Recycling Bins
125.00
Web Site
500.00
Music
350.00
Printing
1,967.96
Insurance
1,079.44
Equipment Rental
1,899.59
Other Costs
Total Expenses
$
18,959.21
$ 25,000.00
$ 6,040.79
Net Income
$
(7,623.32)
$
$ (7,623.32)
Year to Date
Actual Budget Variance
$ 7,479.97 $
1,825.00
15.475.00 $ 35,000.00
$ 24,779.97 $ 35,000.00 $ (10,220.03)
$ 3,129.72
. 193.00
4,000.00
5,511.87
25.00
400.00
1,802.00
3,049.52
83.76
820.99
512.00
250.00
317.10
125.00
595.00
350.00
3,397.28
1,079.44
1,899.59
$ 27,541.27
$ 35,000.00
$
7,458.73
$ (2,761.30)
$ - .
$
(2,761130)
See Accountant's Compilation Letter
James B. Parr CPA Inc.
Annual
Budget
$ 35,000.00
$ 35,000.00
Exhibit 12.
Santa Monica Pier Restoration Corporation
SM Drive In Series Revenue and Expenses
July 1, 2010 to June 30, 2011
Year to Date
Annual
Actual Budget Variance Budget
$ 2,351.17
3,000.00.
2,029.16
150.00
500.00
$ 6.030.33 $ $ (8,030.33) $
$ (8,030.33) $ $ (8,030.33) $
See Accountant's Compilation Fetter
James B. Parr CPA Inc.
June 2011
REVENUE
Actual Budget
Variance
Rental income.
_ $
Total Revenue
$ $
$
EXPENSES
Setup/Takedown
$ 154.93
Event Emcee
Police Fees
31_43
Neighbor Notification Fees
Recycling Bins
Total Expenses
186.36 $
$ (186.36)
Net Income
$ (186.36) $
$ (186.36)
Year to Date
Annual
Actual Budget Variance Budget
$ 2,351.17
3,000.00.
2,029.16
150.00
500.00
$ 6.030.33 $ $ (8,030.33) $
$ (8,030.33) $ $ (8,030.33) $
See Accountant's Compilation Fetter
James B. Parr CPA Inc.
Exhibit 13.
PRC Staff Title
Salary of Rate Range
Executive Director*
$108,000*
Deputy Director
$68,400
Operations Manager
$67,053
Marketing Manager
$52,500
Administrative Assistant
$19.50 /hour
Weekend Activities
Coordinator
$20.50 /hour
*former PRC Executive Director
mwaimm
City Staff Title
Salary of Rate Range
Division Manager
$107,940 - $133,260
Event Services Supervisor
$66,940 - $81,408
Sales and Marketing
Coordinator
$63,408 - $78,288
Event Coordinator
$56,676- $69,972
Administrative Assistant
$21.99 - $27.14 /hour
Event Coordinator-
hourly
$27.25 - $33.64 /hour
URBAN PLACE March 9, 2011
Ctr��.t�.4�timg-%rcrwp, 7ico-
INTRODUCTION RODUCi ION ..................................................................................... ............................... i
THE SANTA MONICA PIER RESTORATION CORPOPA I ICON ....................... ...............................
4
CurrentResponsibilities ........................................................................................................................ ..............................4
Comparison of Service Agreements .................................................................................................. ..............................4
CollectingRent ............................................................................................................................................ ..............................4
LeasingResponsibil ities .......................................................................................................................... ..............................5
Event Reven ue ............................................................................................................................................. ..............................5
ParkingManagement .............................................................................................................................. ..............................5
OTHER PUBLIC SPACES ........................................................................... ...............................
6
Introduction............................................................................................................................................... ...............................
6
Methodology.............................................................................................................................................. ...............................
6
CaseStudies ................................................................................................................................................. ..............................8
TheCity Market - Kansas City, MO .................................................................................................... ..............................8
TheFerry Building - San Francisco, CA ........................................................................................... ..............................9
FindlayMarket - Cincinnati, OH ....................................................................................................... .............................10
GlenEcho Park - Glen Echo, MD ....................................................................................................... .............................11
Granville Island - Vancouver, BC ...................................................................................................... .............................12
LexingtonMarket - Baltimore, MD ................................................................................................. .............................13
PikePlace Market - Seattle, WA ....................................................................................................... .............................14
Pioneer Courthouse Square - Portland, OR ................................................................................. .............................15
Reading Terminal Market -Philadelphia, PA ............................................................................. .............................16
SpecialCases ............................................................................................................................................. .............................17
BealeStreet -Memphis, TN ................................................................................................................ .............................17
NavyPier - Chicago, IL ......................................................................................................................... .............................18
CaseStudy Comparison ........................................................................................................................ .............................20
ManagementSummary ......................................................................................................................... .............................20
LeasingResponsibilities ........................................................................................................................ .............................21
Marketing and Promotional Responsibilities .............................................................................. .............................25
OtherResponsibilities ............................................................................................................................ .............................27
FinancialStructure ................................................................................................................................. .............................30
Relationshipswith Public Agency ..................................................................................................... .............................32
ManagementEffectiveness .................................................................................................................. .............................36
KEYFINDINGS ......... ................................................................ ............ .... ... - ...... ................
. 39
CONSULTANT RECOMMENDATIONS........ ..... .............. ........ ____
..... 40
NEXTSTEPS ......................................................................................... ...............................
41
SOURCES............................................................................................. ...............................
44
APPENDIX A - -- PUBLIC SPACE RESEARCH SURVEY .....,» .......................... ...............................
45
1
The Santa Monica Pier Restoration Corporation (the "PRC ") is the non - profit organization
dedicated to managing and promoting the historic Santa Monica Pier in the Los Angeles
metropolitan area. The PRC's Executive Director left the organization in October 2010. In
October 2010, the PRC contracted with Urban Place Consulting Group, Inc. ( "UPC "), a Los
Angeles -based company that facilitates the development of community in urban places, to
assist the PRC in defining its long -term goals and in developing and implementing
effective management and financial strategies.
More specifically, the PRC's Board of Directors is using the interim management period to:
a. Identify and develop the PRC's long term vision for the Pier;
b. Identify and analyze existing models for managing public spaces like the Pier;
c. Identify a preferred management and financial model and define the PRC's role
within that model; and
d. Develop a strategic plan to implement the preferred management and financial
model.
Leasing Responsibilities
Event Revenue
Parking Management
The nine organizations that completed our survey answered questions on topics ranging
from leasing and rent collection to marketing and promotions.
7'
The Ferry Building — San Francisco, CA
The Ferry Building, listed in the National Register of Historic Places, has been a San
Francisco institution since its opening in 1898. Today it houses a ground floor retail
marketplace, with premium office space located on the second and third floors.
Permanent retailers and
temporary vendors occupy
the halls and arcades of the
interior, and the wide
esplanade on the Bay -side
of the building is also open
to pedestrians. Two city -
side cafes and two Bay -
side restaurants offer
spectacular views to their
patrons. The Ferry
Building is owned by the
Port of San Francisco and
• 'Showcase small regional producers that practice
traditional farming or production techniques and who
develop personal relationships with their customers;
• Promote the Bay Area's vast ethnic diversity and serve
as an incubator for artisan producers who are
returning to sustainable methods of agriculture and
production;
• Provide a central location for the promotion of the
world -class food and wine producing regions of
Northern California and recognize wine's connection
to our rich regional cuisine;
• Collaborate with local transit authorities to build
strong regional ties to the Ferry Building and support the revitalization of the San
Francisco waterfront; and
• Operate as a community gathering -place for the celebration of local culture and
cuisine."
Glen Echo Park — Glen Echo, MD
Glen Echo Park was
formed in 1891 as a
National Chautauqua
Assembly, a movement
dedicated to adult
education in sciences, the
arts, and languages, which
was popular in the late
191h and early 2011,
centuries. It grew into
Washington, D.C.'s premier
amusement park until the
late 1960s. The federal
government obtained the
land, which is managed by
the National Park Service
to this day. In 2002,
Montgomery County Photo courtesy of "ahtgen" on Plickn
established the Glen Echo
Park Partnership for Arts and Culture (the "GEPP ") to manage the park's programs and
facilities. The mission of the GEPP is
"... to present vibrant artistic, cultural and educational offerings at Glen Echo
Park and to promote the Park as a unique destination for the region's diverse
population."
While Glen Echo Park rents its various ballrooms and pavilions for special events, its main
focus is to provide studio space for artists and art organizations that offer classes to the
public. The Park also houses a historic Dentzel Carousel, which operates every year from
April through September. Other Park amenities include a picnic and playground area and
a seasonal cafe. Various dance companies and presenters use the Park for weekly social
dances, in styles ranging from swing to tango. Altogether, these activities and uses draw
over 400,000 visitors to the Park annually.
11
Lexington Market — Baltimore, MD
Lexington Market has been a Baltimore tradition since 1782. The site began as a meeting
place for farmers and merchants, on land donated to the city by a hero of the American
Revolution. By 1925, there
were over 1,000 stalls
t-nAB CAKE under 3 block -long sheds.
In 1949, a large fire
destroyed the market's
existing buildings and
propelled the market to
modernize. The
revitalization of the
market was finally
completed in 2002. Today
it houses 140 merchants
that provide fresh meats,
seafood, poultry, groceries,
specialty items and
prepared foods for take-
out and on -site
consumption. Events
scheduled throughout the year include Lunch with the Elephants, The Chocolate Festival,
special programs for the holidays, community services, and midday music events. The
Market is located in the hub of Downtown Baltimore's West Side and will play a large role
in that area's ongoing renaissance and
redevelopment.
Photo courtesy of "BBC Radio 4" onFlickr..
13
on
the "living room' of
downtown Portland. It is
managed by the non - profit
Pioneer Courthouse
Square, Inc., which has a
management agreement
with the City of Portland's
Parks and Recreation
Bureau and is responsible
for leasing, marketing,
promotions and events,
and repairs and
maintenance. The Square
hosts over 300 events per year, including outdoor movies, concerts, and festivals, and was
one of the first non - smoking public spaces in the United States. Access to two MAX light
rail stations are incorporated into the plaza, and over 9 million people visit the Square
annually.
Photo courtesy of Pioneer Courthouse Square, tic.
is
Special Cases
Urban Place Consulting contacted the management organizations of the following public
places. Completion of a formal survey was deemed inappropriate, however, because these
organizations are currently undergoing restructuring. A summary of each case and
commentary from its organizers follows.
Beale Street —Memphis, 7N
Created in the 1840s by an entrepreneur and developer, Beale Street (then Beale Avenue)
saw its musical beginnings when the Young Men's Brass Band began to perform there in
1867. Since that time, Beale Street developed into a neighborhood lined with restaurants,
bars, and music venues. In
the early 1900s, the area
was well known for heavy
gambling, voodoo, murder,
and prostitution. In the
1940s, jazz legends Louis
Armstrong, B. B. King, and
others played on Beale
Street and helped develop
Pboto courtesy of Performa ]Entertainment. the style known as Memphis
Blues. Beale Street was even
officially declared the "Home of the Blues" by an act of Congress in 1977. Despite this,
Beale Street went into decline in the 1970s after a failed urban renewal program. It
revived in the 1980s with the redevelopment and management of Performa
Entertainment Real Estate, which managed Beale Street until recently.
The City of Memphis owns all the land and buildings that comprise the Beale Street
district. Performa Entertainment has been the sole manager under a master lease
agreement with the City since 1982, and was responsible for leasing, promotions,
marketing, safety, and maintenance. In 2010, however, the City and Performa reached a
settlement agreement for a multi -year court battle over alleged financial
misappropriations.' Going forward, Performa will no longer manage Beale Street, and the
City is forming a citizens' committee to determine the future of the district.
Urban Place Consulting interviewed Jeff Sanford, a Memphis -based urban redevelopment
consultant familiar with Beale Street's history and current issues. Sanford will act as a
consultant to Mayor A. C. Wharton Jr.'s appointed "Blue Ribbon" citizens' committee and
will make recommendations on how to proceed with Beale Street.
When reflecting on Beale Street's history, Sanford said that, "although it took the better
part of twenty years to become profitable, Beale Street has been a great success, and is
1 "Controversy Remains Around City, Performa Settlement." Memphis Daily News. 2010 July 9.
http : / /www.memphisdailynews.com/ editorial /Article.aspx ?id= 51206. Accessed 2011 February 3.
17
• Revise the Pier's governance structure to create a governing body whose function
is to serve as an advocate solely for Navy Pier, to be its "champion:'
• Develop a strategic plan providing a framework for evaluation of ULI and other
recommendations from the perspectives of fulfilling the Pier's vision, financial
sustainability, the ability to be implemented, and other factors.
The ULI recommended that the above goals be accomplished before embarking on any
redevelopment or capital improvement efforts at Navy Pier.
Because the MPEA currently governs both Chicago's McCormick Place (the nation's
largest convention center) and Navy Pier, ULI recommended that Navy Pier have its own
Board - "a champion ... speaking and advocating only for Navy Pier." According to MPEA's
summary document, this new governing body "could include civic and public leaders
serving on a separate, non - profit entity or an independent subsidiary of the MPEA and
[should] focus exclusively on what is best for the Pier. The new Navy Pier board,
according to ULI, should be more than a'mere advisory board' and should have a'clear
mandate of responsibility and authority to carry out the mission. "'
The ULI report3 recommended that Navy Pier develop a comprehensive long -term
strategic plan that includes "the purpose and mission of Navy Pier, guiding principles,
business objectives, a
vision that operationalizes
the mission, a business
plan and business case, a
redevelopment program
plan, a master land use and
infrastructure plan, and a
self- sustaining financial
plan and capital budget"
Specific suggestions
related to management and
finances include investing
10 percent of gross
revenues back into Navy
Pier for deferred
maintenance and new
capital projects, andR
developing benchmarks as Photo courtesy ofwww.destinat(
measures of success, such as
visitation levels, net profitability, and spending per visitor.
Urban Place Consulting's communication with MPEA staff in January 2011 confirmed that
MPEA is taking the ULI's recommendations seriously. They declined to answer our survey
3 "Navy Pier, Chicago, IL: An Advisory Services Panel Report" Urban Land Institute. 2010.
http:// www. navypier. com/ ULlreport /pdf /NavyPierReport.pdf. Accessed 2011 February 23.
19
Leasing Responsibilities
The following tables compare the leasing responsibilities of each case.
21
5 Inferred from information on tenant history ( http:// www. pioneercourthousesquare .org /history.htm) and
tenant lease expirations found in Exhibit C of Management Agreement with City of Portland.
23
Marketing and Promotional Responsibilities
The following tables compare the marketing and promotional responsibilities of each
case.
6 Letter from Lino Siracusa, Director, Granville Island; dated 2007 July 9. Accessed from
http: / /forums.egullet.org /index.php ? / topic/ 63043 - granville- island- market /page_st_150 on 2011
February 22.
25
Other Responsibilities
The following tables compare the additional responsibilities of each case, including
maintenance, safety, parking management, and marketing.
27
8 From Management Agreement between Pioneer Courthouse Square, Inc. and City of Portland Parks and
Recreation Bureau; §10.3; signed 2008 December 11. Obtained via post from Pioneer Courthouse Square,
Inc.
Y Ellis, Barbara. Portland's Pioneer Courthouse Square and Violations of First Amendment Rights. 2008,
January 7. http: / /www.pprc- news. org / press /WhitepaperonPioncerSquare.pdf. Accessed 2011 February
21.
29
31
33
35
37
KEY FINDINGS
Based on our comparative research and analysis, UPC reached the following conclusions
regarding public space management in North America.
#1: Management is Actively Involved with Leasing
From Seattle to Philadelphia, successful public space management organizations are
actively involved with day -to -day leasing responsibilities, from identifying prospective
tenants and negotiating leases to collecting rents. Lease terms tend toward five years in
length, but vary depending on the size, permanence, and initial investment of a tenant.
Rental rates also varied, from charging base rent plus a percentage of revenue, to simply
charging a lower rent based on location. In some cases, chain stores or certain types of
businesses were forbidden or unlikely to be approved.
Similar to the PRC, nearly all organizations surveyed are responsible for developing a
long -term leasing strategy. Different from the PRC, however, is that most organizations
surveyed also implement that leasing strategy through the negotiation of leases with
prospective tenants. In some cases, management does minimal recruiting and instead
reviews lease applications submitted either in person or through the organization's
website.
#2: Management is Active in Marketing and Promotions
All of the management organizations surveyed are responsible for developing long -term
marketing or promotional strategies, as well as for coordinating and funding activities
and events. Similar to the PRC, some organizations pursue outside grants or funding to
coordinate special events, and others charge their tenants a marketing fee. The most
successful events tend to be the ones that fit into the organization's general mission, and
can range from four major events per year, like the Ferry Building, or over 300 events per
year, such as Pioneer Courthouse Square.
t#3o Most Organizations Manage and Fund Routine Maintenance,
Capital Improvements, Security, and Parking
All of the management organizations surveyed stated that they pay for and coordinate
routine repairs and maintenance services, whether they are performed by staff or
contracted out. Management at the Ferry Building charges a Common Area Maintenance
(CAM) fee to their tenants. At Pioneer Courthouse Square, management uses the local
Business Improvement District's contractors to maintain the plaza and amenities.
In most cases, the management organization is responsible for coordinating and funding
capital improvements. Major infrastructure work, however, is often the responsibility of
the City or public agency that owns the land (such as the Port of San Francisco for the
Ferry Building, or the National Park Service for Glen Echo Park) or is funded through a
voter - approved levy (as in Pike Place Market in Seattle).
39
01: Develop New Management and Flnanclal Models for the Pler
The management responsibilities of the Pier are currently divided between the City and
the PRC. The City of Santa Monica manages the identification of prospective tenants and
the negotiation of leases, in addition to undertaking maintenance, repair, and safety
matters. The PRC is responsible for promotions, filming permits, and some aspects of
leasing and operations.
In every case we surveyed, however, only one organization was responsible for all of
these roles, making the management of that public space highly efficient. In order to
streamline the processes for leasing, security, repairs and maintenance, and promotions
and marketing at the Pier, we recommend that the City and the PRC develop a model that
will align these responsibilities into one management entity.
To determine an appropriate financial and management model going forward, a review of
the past several years of Pier income, expenses, and other financial records is necessary
for the PRC and the City to understand the true financial standing of the Pier.
Knowing who visits the Pier is essential to hosting the right fundraising events, pursuing
the right grants, and developing a marketing and promotional strategy. User counts and
intercept surveys are common tools used by for - profit businesses; however, many non-
profit organizations benefit from using this relatively inexpensive method for
understanding their clientele. Examples include the Downtown Phoenix Partnership
(surveys every five years), the Downtown Denver Partnership (every three to five years),
and the Downtown Center Business Improvement District in Los Angeles.
Staff and volunteers at Findlay Market conduct customer intercept surveys of at least 300
shoppers twice a year, as well as periodic "safe and clean" surveys to gauge shoppers'
impressions of the Market and its surroundings. They also utilize electronic pedestrian
counters on the doors of the market house. Pike Place Market conducts quarterly
pedestrian counts and, at the time of this report, is conducting a two -phase market
research study that includes phone surveys and on -site intercept surveys.
The PRC would benefit from these practices, as well. Not only would regular surveys help
to establish and project trends; they could be used as benchmarks to gauge progress and
help secure additional funding or sponsorship for the Pier.
NEXT STEPS
Urban Place Consulting recommends asking the following questions and taking the
following steps as an action plan for the PRC's Board of Directors.
41
Determination of an Appropriate Management Model
Based upon the research above, the City, in partnership with the PRC, should determine
which recommendations, if any, to follow. Should one entity be responsible for leasing
activities? What about parking, security, and maintenance?
Preparation of a Business Plan, Budget, and Implementation Strategy
Working in partnership, the City and PRC should develop a detailed business plan, budget,
and implementation strategy based on the agreed -upon management model. As the
business plan and budget are being developed, both parties should expect to revisit
previous discussions and modify previous decisions in order to make the business plan,
budget, and implementation strategy feasible.
43
• • , , - y 211 .14 1 ATJ
Thankyou foryour time and consideration in answering these questions. Please feel free to
add any commentary you feel would he helpful to an organization that is assessing its
management and financial processes.
GENERAL ORGANIZATION
1. What are your organization's primary responsibilities (i.e., collecting rents,
managing leases, coordinating marketing or special events, etc.)?
1 How many staff members does your organization have?
3. How many Board members does your organization have?
4. What is your annual budget?
S. Will you provide an electronic copy of your annual budget?
LEASING
1. Who collects rents? Your organization, or the public agency that owns the land?
2. Who are rent checks made payable to?
3. Into whose account do rent checks go?
4. How long is a typical lease term?
S. How many tenants do you have on average?
6. Is your organization responsible for developing and implementing a long -term
leasing strategy?
7. What is the process for identifying and negotiating with prospective tenants? What
roles do your organization and the City or other public agency play?
8. Does your organization have different leasing strategies for longer -term tenants
and for shorter -term vendors? How are they different?
MAINTENANCE AND SAFETY
1. Does your organization coordinate and /or pay for routine repairs or maintenance
services? If not, who does?
2. Does your organization coordinate and /or pay for capital improvements? If not,
who does?
3. Does your organization coordinate and /or pay for safety, police, or security
services? If not, who does?
PARKING MANAGEMENT
1. Is your organization responsible for managing nearby parking?
2. If so, how does your organization manage parking? Are parking revenues and
expenses part of your annual budget?
MARKETING AND PROMOTIONAL ACTIVITIES
1. Is your organization responsible for developing a long -term marketing or
promotional strategy?
45
Pier Management Research - DRAFT
Prepared for
The City of Santa Monica
August 30, 2011
Urban Place Consulting Group, Inc.
Steve Gibson, President
5318 E. Second St., Suite 336
Long Beach, CA 90803
562- 439 -6571
Steve @urbanplaceconsulting.com
www.urbanplaceconsulting.com
The Santa Monica Pier is at a critical point in its history. The Pier is managed jointly by the
City of Santa. Monica and the non - profit Pier Restoration Corporation ( "PRC "). The recent
departure of the PRC's Executive Director, along with an upcoming master planning
process, have initiated a period of reflection and research; how can the Pier be better
prepared for the future? How can it become a vibrant, long -term success for the City of
Santa Monica and the millions of people that visit annually from around the globe?
The City and the PRC have taken several steps to answer these questions:
1. Interim Management. The PRC Board of Directors hired Urban Place Consulting
Group ( "Urban Place ") to provide interim management of the PRC. In this regard,
Urban Place has had a unique and intimate involvement with the day -to -day
management and operations of the Pier, providing valuable insight on current
processes that have room for improvement.
2. Best Management Practices. The PRC Board hired Urban Place to conduct a best
management practices survey of successful public spaces in North America. The
sites examined are listed in the Project for Public Spaces ( "PPS ") database of "Great
Places" and are well known and loved throughout the country. For direct
comparison with the Pier, the "Great Places" chosen are publicly -owned spaces
that house private businesses.
3. City Research. The City commissioned the Economic Development Department
( "EDD "), which manages the Pier for the City, to conduct its own research on
current Pier management practices. The results of this research will be publishe
in a report titled "Pier Governance and Management Study."
4. Financial Reconciliation. U
finances by examining reven
Fund. Urban Place worked cl
information related to the Pi
The purpose of this report is to synt
described above, and to recommenc
Monica Pier going forward.
Interim Management
ent
For the past 22 years, Urban Place h
organizations on an interim and Ion
opportunity to compare the functioi
PRC. For nearly a near, Urban Place
worked with various City departme
Interestingly, nine out of the ten well -known public spaces were either managed privately
or by non - profit organizations. Navy Pier, which is by far the closest comparison to the
Santa Monica Pier both in size, popularity, offering, and physical structure, was previously
managed by a hybrid city -state municipal agency, the Metropolitan Pier and Exposition
Authority ( "MPEA "). As of July 1, 2011, however, the MPEA entered into a 25 -year lease
agreement with Navy Pier, Inc., a newly formed non- profit organization that will be
responsible for the governance, operations, and management of the Pier. The purpose of
Special Events $95,667
Total PRC Revenue $1,122,018
TOTAL PIER REVENUE $5,923,309
CITY PIER FUND EXPENSES
Economic Development Division
Salaries and Wages
Supplies
City Grant to PRC
Parking Operator
Carousel Operator
Police Pier Patrol
Depreciation Expense
Total Economic Development Division
Harbor Division
Salaries and Wages
Supplies
Total Harbor Division
Maintenance Division
Salaries and Wages
Supplies
Total Maintenance Division
Total City Pier Fund Expenses
PRC EXPENSES
General and Administrative
TDS
Carousel
Paddleboard Races
Outside Events
Santa Monica Drive -In Series
Total PRC Expenses
TOTAL PIER EXPENSES
PIER NET INCOME (LOSS)
$173,363
$292,169
$494,900
$347,387
$190,588
$240,010
$390,000
$2,128,417
$1,048,171
$174,171
$1,222,342
$592,532
$1,218,319
$1,810,851
$604,994
$247,443
$65,241
$27,541
$28,956
$8,030
$5,161,610
$982,205
$6,143,815
$(220,507)
True Cost Reconciliation
This model assumes the above revenue and expenses from FY 2010 -11, but represents a
more accurate depiction of the City's actual costs. We used Harbor Unit and Police
Department costs that more accurately reflect the true level of service provided on the
Pier (50% of reported costs in FY 2010 -11.)
6
Total City Pier Fund Expenses
$4,430,434
PRC EXPENSES
General and Administrative
$604,994
TDS
$247,443
Carousel
$65,241
Paddleboard Races
$27,541
Outside Events
$28,956
Santa Monica Drive -In Series
$8,030
Total PRC Expenses
$982,205
TOTAL PIER EXPENSES
$5,412,639
PIER NET INCOME (LOSS) $510,670
After accounting for the true costs of Harbor and Police patrol, the Pier operates at a net
surplus; and yet this reconciliation doesn't reflect additional cost savings that can be
realized by streamlining operations under one partnership organization. The Pier is
clearly profitable and can be even more so with management by a streamlined
partnership organization.
Successful and iconic public spaces like the Santa Monica Pier have millions of visitors
annually; the Santa Monica Pier has over 6 million visitors per year. These well- attended
public attractions are, in most cases, managed by non - profit organizations in partnership
with government agencies. The benefits of a public - private partnership include cost
savings, efficiency in management and contractual services, and quicker response times
to tenants and the public, as well as utilization of public sector strengths.
While cities may be efficient in running parks or open spaces, a large and iconic public
space with multiple private tenants and a myriad of offerings is incomparable to a typical
park or open space. It is best managed as a public - private partnership organization, with
the public sector defining the long -term goals and visions of the community, and the
private non - profit sector carrying out the day -to -day operations.
In places where government agencies have solely managed complex public spaces, such as
Chicago's Navy Pier, the model often fails for several reasons: because it is not directly
involved in day -to -day operations, because management is physically distant from the
space, or because bureaucratic processes don't allow efficiencies in management's
response to operational issues. A public - private partnership remedies these issues by
capitalizing on the relative strengths of both the public and private sectors.
The City's role would continue to include structural maintenance and capital
improvements, as well as Harbor Unit or Police staffing as deemed necessary. The PMC
would be responsible for daily security personnel and ambassadors on the Pier. The City
would maintain oversight of the Pier through a dedicated seat on the PMC Board.
The public - private partnership structure that we recommend is a hybrid model that
integrates the strengths of several scenarios described in EDD's study. It incorporates the
public oversight of the City (Scenario 1), the autonomy of a new non -profit (Scenario 2),
the long -term nature of a ground lease with a private entity (Scenario 4), and
improvements to the size, makeup, and responsibilities of the existing PRC Board of
Directors (Scenario 5). We address the concerns of EDD's study below and discuss how a
hybrid public - private partnership can mediate these concerns.
Event Production
While the City does have in -house expertise in producing large -scale and small -scale
events, a scenario in which the City took over daily management of the Pier would likely
lead to operating inefficiencies similar to those that exist today due to coordination
between City departments, the establishment of additional commissions, and a lengthy
and bureaucratic leasing process. In the hybrid partnership we recommend, the PRC
Board of Directors would focus solely on event production and fundraising. One PMC staff
member, the Vice President of Sponsorship and Events, would also be dedicated to
coordinating and producing events on the Pier within the parameters of pre - established
event guidelines.
Leasing
A critical area of concern among stakeholders is the lengthy leasing process for Pier
tenants. Keeping the status quo, or the absorption of all Pier management duties by the
City, would continue to hinder the leasing efforts of future tenants. With leasing and
tenant relation responsibilities under the PMC, however, the leasing process can be
modeled after commercial leasing strategies that are customary in commercial real estate
and much more efficient.
Fundraising and Sponsorship
Fundraising and sponsorship efforts could prove to be more difficult when a non- profit is
not involved to incentivize tax write -offs. Instead, the PRC would be dedicated solely to
fundraising, sponsorship, and event production duties, leaving the new PMC to manage
daily Pier operations. The Vice President of Sponsorship and Events would be committed
to fundraising and sponsorship efforts, and would be a point of contact for the PRC Board.
Staffing
In the recommended public - private partnership structure, all staff would be staff of the
PMC. The PMC would need to employ outside contractors to provide some services, such
as custodial work, security, and legal services. For more information on staffing, see
"Organizational Structure" below.
10
Carousel Rental 110,000
Carousel Ticketing 171,000
Licensing 500
TOTAL OPERATIONS INCOME $4,649,500
IIINIJ►YIIIPWO&Iy
TDS Income 200,000
Paddle Board 25,000
Other Events -
TOTAL EVENT INCOME 225,000
TOTAL INCOME 4,874,500
EXPENSES
Management
799,500
Administration
200,800
Operations
90,000
Events
300,000
Utilities
171,000
Service Agreements
173,000
Custodial Services
350,000
TOTAL EXPENSES
2,084,300
NET INCOME (LOSS) $2,790,200
Organizational Structure
The following organizational chart depicts a possible arrangement for staff of the Pier
Management Corporation. Responsibilities of each position follow.
12
• Manage human relations issues
Vice President of Sponsorship and Events
• Long term, this position will be funded from event income and sponsorship
• Secure sponsorship for self - produced events
• Work with non - profit, community, and business leaders to secure sponsorships,
grants, and additional Funding opportunities
• Maintain and develop relationships with corporate partners
• Coordinate and manage all aspects of self - produced events, such as the Twilight
Dance Series and Paddleboard Races
• Coordinate staffing and contracting for self - produced events
• Develop additional events
Director of Leasing and Tenant Relations
• Draft and administer leasing guidelines with CEO, Board, and City input and
approval
• Act as point -of- contact to Pier tenants
• Monitor tenant application process and review tenant applications
• Create standard lease template
• Draft and negotiate tenant leases
• Respond to tenant inquiries and complaints
• Oversee filming on the Pier
• Update and administer filming guidelines and fee schedule
• Update and administer special event guidelines and fee schedule
• Develop filming and promotional event databases and filing system
Director of Marketing and Communications
• Develop and implement a marketing and communications plan
• Market promotional opportunities on the Pier and act as primary point of contact
for organizations using the Pier for promotions.
• Work with community organizations locally to market the Pier
• Pursue compensation for use of Pier brand or likeness
• Maintain upcoming events section of Pier website
• Promote the Pier locally and nationally
• Produce weekly notice of upcoming events and distribute to tenants
Director of Pier Operations and Use
• Administer street performer program
• Manage daily maintenance and security programs
• Manage Pier events setup and breakdown
• Manage carousel booking and use
Office Administrator
• Answer and direct phone calls and other inquiries
• Prepare and deliver Board and committee packets prior to meetings
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