SR-03-12-2013-3Dlame City af i Council Report
Santa Monica
City Council Meeting: March 12, 2012
Agenda Item: 3-D
To: Mayor and City Council
From: Andy Agle, Director of Housing and Economic Development
Subject: Movie Theater Consulting Services
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute a sixth modification to Professional Services Agreement No. 8943 in the
amount of $60,000 with IJM Enterprises, a California -based company, to provide
consulting services related to development of a cinema project in the Downtown. This
will result in an amended agreement with a new total amount not to exceed $180,000,
with future year funding contingent on Council budget approval. The term of the
agreement shall continue as month -to- month.
Executive Summary
The City hired IJM Enterprises in 2004 to provide consulting services related to cinema
planning and development in the Downtown area. These consulting services have
included assisting the City with evaluating theater operators and negotiating complex
deal terms for possible cinema development. Staff is seeking an amendment to IJM's
contract in the amount of $60,000 to support continued assistance with discussions and
negotiations with prospective theater operators /developers for the Downtown area.
Background
The Promenade Uses Task Force was established by the City Council in 2001 to
understand how best to enhance the vitality and maintain the proper balance of uses on
the Third Street Promenade and in the Bayside District. The Task Force studied the
mix of retail, restaurant, and entertainment uses at that time, and concluded that the
existing cinemas in the District were outdated and likely would become less competitive
in the near future unless they could provide appropriate amenities such as stadium
seating and state -of- the -art technology. In its review of the Task Force
recommendations, the City Council identified cinema redevelopment as a top priority for
the Downtown area.
1
Following Council review, the City hired IJM Enterprises in 2004 to provide expert
advice regarding cinema planning and development. With the assistance of IJM
Enterprises, the City issued an RFP in January 2008 soliciting proposals for the
possible development of a mixed -use cinema project at 1320 4th Street. This RFP
process led to the selection of Metropolitan Pacific Capital Inc. in partnership with AMC
Entertainment Inc. (AMC Development Team).
On September 8, 2009, Council authorized exclusive negotiations with the AMC
Development Team. During the exclusive negotiating period, IJM Enterprises assisted
the City with negotiating the deal terms. The exclusive negotiating agreement with the
AMC Development Team expired on November 26, 2012 and AMC informed staff that
the development team would not seek an extension of exclusive negotiations.
Discussion
On December 11, 2012, Council authorized staff to negotiate with other cinema
providers to develop a cinema project in the Downtown area. IJM Enterprises had
played a lead role in reaching out to cinema operators who are actively expanding and
building new theaters; however, the contract funding for IJM Enterprises has been
expended. Currently, there is strong interest in the project from developers and cinema
operators, and staff is expecting to receive several development proposals to evaluate
this spring. If a viable cinema development proposal is selected, staff will seek Council
authorization to enter into exclusive negotiations. IJM's experience and expertise will
be essential for the negotiations.
Contractor /Consultant Selection
Given the specialized nature of the theater industry, IJM Enterprises was selected in
2004 based upon their qualifications and specialized cinema experience. The principal
of IJM Enterprises, Ira Mitchell, has over 30 years of experience in cinema
development. The specialized expertise of IJM Enterprises is needed to help facilitate
evaluating the next phase of development negotiations for a cinema project in the
Downtown area. The original contract in 2004 was executed as a sole source and each
2
subsequent modification has been executed in a similar manner. In the first
modification, the term was modified to be month -to -month based on project needs. The
term of the agreement shall continue as month -to- month.
At the time the original contract was executed, IJM Enterprises was the only known
movie theater strategy consultant in the region. The original contract was approved by
the City Manager because the amount was less than $70,000. The contract was
subsequently amended pursuant to Council authorization. Staff has reevaluated the
professional services needed and the availability of cinema theater consultants who can
perform this work and has determined that IJM Enterprises remains uniquely qualified
and experienced to warrant the sole source extension.
Financial Impacts & Budget Actions
The contract modification to be awarded to IJM Enterprises is $60,000, for an amended
contract total not to exceed $180,000. Funds in the amount of $30,000 are available in
the FY 2012 -13 budget in division 012681; the contract will be charged to account
012681.555060. The remaining $30,000 will be requested as part of the FY 2013 -15
Proposed Biennial Budget and is contingent on Council budget approval.
Prepared by: Erika Cavicante, Senior Development Analyst
Approved:
Andy Agle, Directo`r'"--
Housing and Economic Development
Forwarded to Council:
3
Rod Gould
City Manager
Reference Amended
Contract No. 8943 (CCS)