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SR-04-23-2013-3BID City ouncil and City of Redevelopment ency Report Santa Monica, City Council Meeting: April 23, 2013 Agenda Item: 5— To: Mayor and City Council From: Karen Ginsberg, Community and Cultural Services Director Subject: License Agreement with Cirque du Soleil for Use of a Portion of the 1550 PCH Parking Lot Recommended Action Staff recommends that the City Council authorize the City Manager to negotiate and execute a proposed License Agreement with Cirque du Soleil, a Delaware based company, for use of a portion of the 1550 PCH parking lot for theatrical performances from January 2 through March 29, 2014. Executive Summary In accordance with the 1550 PCH Parking Lot Cultural /Entertainment Event Policy, following a competitive process, staff recommends Cirque du Soleil (CDS) for the 2013- 2014 Event Season. CDS would present "Totem" beginning January 2014. The total occupation period, including move in and tear down, would be from January 2 through March 29, 2014. The proposed rental fee to the Beach Fund for the portion of the 1550 lot for this period is $1,088,808. Additional anticipated economic benefits to the City include patron parking revenues at the Civic Center parking structure, purchase of local supplies and services by CDS for its operation, and collateral spending by CDS visitors in local restaurants and businesses. This third return of CDS would incorporate mitigations, proven practices, and lessons learned from previous performances to reduce impacts on Pier businesses and nearby residents. Background Council first approved a policy to allow commercial events in the 1550 PCH parking lot (1550 lot) on tbGr 14 <;a 0 The purpose of allowing commercial events is threefold: (1) to provide much needed revenue to the Beach Fund to support ongoing operations and capital improvements, (2) to meet the community's demand for increased cultural offerings, and (3) to provide economic benefits to the cultural tourism sectors of the community. The policy has been modified over time to provide greater flexibility in the review process and evaluation criteria, and to incorporate concerns of the Santa Monica Pier Corporation (SMPC), formerly the Pier Restoration Corporation. CDS returned to the 1550 lot in 2009 and again in 2012. Prior to each visit, efforts were made to identify and address concerns of the SMPC and Pier lessees about reduced parking availability in the 1550 lot for Pier visitors and the potential negative impacts on Pier businesses. The license agreement for each of the prior visits included a full range of conditions and mitigations to address these concerns. These mitigations included incorporating prepaid discounted parking for CDS patrons with their online ticket purchase at offsite parking lots, providing a free shuttle service to and from the offsite parking as well as a weekend shuttle for Pier visitors from the 2030 Beach lot, offering cross promotion opportunities to Pier merchants, and providing direct financial and in- kind partnership support to the SMPC and the Santa Monica Pier Lessees Association (SMPLA). Council directed staff to prepare an economic impact analysis during the 2009 visit to examine the impacts and benefits of CDS. Staff reported on Octobei _.?6_ =20! 0 clear economic gains to the City as a whole from commercial events through spending by visitors in restaurants, hotels, shopping, parking and transportation, as well creating additional employment opportunities during the period of the event. The impacts to Pier businesses are more mixed and differ depending on the specific types of business, with restaurants generally benefitting more than entertainment businesses. The timing change in 2012 from a Fall run to the January to March window is viewed by the Pier lessees as a positive move and there is general agreement that the 2012 visit was more favorably received by the Pier businesses. Discussion Vendor Selection In September 2012, staff issued a Request for Event Proposals (RFP) for the 2013- 2014 Event Season, The RFP was posted on the City's online bidding website and was sent to the list of event producers who had expressed an interest in staging an event in vo the 1550 lot over the past several years. Staff received proposals from CDS and Cavalia in response to the RFP. The Extended Events Review Committee, which includes representatives from the Santa Monica Pier Corporation, Convention and Visitors Bureau, and City staff, reviewed both proposals. Each was evaluated based upon criteria established in the 1550 PCH Parking Lot Cultural /Entertainment Event Policy, including the degree to which the event offers a unique cultural or entertainment experience, demonstrates clear measurable economic benefit to the City and local businesses, including Pier lessees, contributes to the Beach Fund, addresses traffic and parking impacts, and minimizes environmental impacts. Based upon these criteria and the demonstrated commitment of CDS to satisfy all City requirements, the committee recommends selection of CDS as the best bidder to provide theatrical performances for the 2013 -14 event season. The Cavalia proposal included a larger footprint than CDS, required a longer set up and tear down period, and provided a much lower financial offer. Cirque du Soleil Proposal The CDS proposal builds on the successful performance plan of their prior two visits, Highlights of CDS' proposal are as follows: ® CDS would present "Totem ", a visual and acrobatic exploration of the evolutionary progress of the human species. • The Occupation Period would run from January 2 to March 29, 2014. • The Performance Period would be from January 17 to March 16, 2014, with one show per day on Tuesdays through Fridays, two shows on Saturdays, and Sundays, with an option to add six additional Thursday or Friday shows at the discretion of the Cirque. This represents a one week reduction in the performance period and a reduction in the number of shows on Fridays from the 2012 visit. • CDS would occupy the same footprint as in 2012, using 719 of the 1,173 spaces in the 1550 lot, as shown in Attachment A. The base rental for the site is 3 $1,088,808 for the 2.9 month period. This reflects a CPI increase in the $1.28 per square foot rate from 2012. • CDS would follow the Parking and Traffic Management Plan, first prepared in 2009 and updated in 2012 to reflect the removal of the temporary parking lot that had been installed by CDS in 2009 in the location now known as Tongva Park. Efforts to better manage the overall supply of spaces in the beach lots to the north and south of the Pier and in the Civic Center, and nearby private lots in 2012 helped to minimize parking and traffic impacts would be implemented. • CDS would provide a free Pier shuttle on Friday, Saturday, and Sunday from the 2030 Beach lot for visitors to the Pier and the beach. • CDS proposes to build on and strengthen prior cross promotions with the SMPC, Pier tenants, and Convention and Visitors Bureau (CVB) and integrate special Pier /local partner offers onto the CDS website. CDS is also committed to joint packaging and initiatives with the Santa Monica Pier Lessees' Association (SMPLA) to direct CDS patrons to the Pier before and after the performances. • GDS would continue to provide financial and in -kind sponsorship to the SMPC for the Twilight Concert Series as well as support to the SMPLA, CVB, and other business groups. • CDS would continue its educational outreach to the Police Athletic League (PAL) with the Cirque du Monde program and to the Santa Monica Malibu Unified School District. • CDS proposes to work with the SMPC and SMPLA to relocate Pier employees to adjacent beach lots and /or explore arrangements at nearby private lots. • Sustainability practices would include a recycling program in public areas and employee work space, composting of food residue in the employee cafeteria, replacement of plastic souvenir gift bags with oxi- biodegradable bags, products made with organic cotton and bamboo, booklets printed on 100% recycled paper and CD releases made with compostable product. • CDS proposes to pay all City costs and services associated with the event including but not limited to police services for crowd /traffic control, fire safety 19 officers, event licensing/liaison and location supervision, parking staff, utility charges, sanitation services, and custodial /maintenance services. Public Outreach Following the 2012 visit, staff held a Community Meeting on March 14, 2012 to gain feedback about the CDS visit and events, in general. Although postcards were mailed to over 150 residents and businesses in the area, only five people attended the meeting. The discussion focused on traffic and parking impacts on residents, who rely on parking in the Appian Way lots. One of the suggested improvements was for the installation of electric gates to control access to these lots for residents with overnight permits. This improvement is scheduled for completion this spring. Staff attended the SMPLA meeting on April 3, 2013 to review the CDS proposal. There is general agreement among the Pier lessees that the January to March time frame is better for Pier businesses and the group acknowledged the commitments CDS has shown in the past. The main concerns relate to parking and the impacts of Pier construction. The lessees asked if the weekend shuttle hours might be extended and expressed interest in working with CDS on promotion partnerships. The SMPC discussed the CDS proposal at the April 3 Board meeting and heard from Pier lessees in attendance. Hearing no objections, the SMPC voted unanimously and enthusiastically to welcome back CDS and encourage staff and the SMPLA to work together to make the CDS visit successful for all visitors to the Pier. the license agreement is approved by Council, CDS will seek approval from the California Coastal Commission for the event. Environmental Analysis The License Agreement with CDS for use of a portion of the 1550 Lot is categorically exempt from environmental review pursuant to the California Environmental Quality Act (CEQA) Guidelines, Section 15304(e), as these actions constitute minor temporary use 5 of land having negligible effects on the environment. CEQA Guidelines specifically include uses such as carnivals and circuses. Financial Impacts & Budget Actions Approval of CDS's proposal will generate $1,088,808 in Special Event revenue to the Beach Fund. A portion of this revenue will offset the estimated loss in parking revenue due to spaces occupied by the CDS in the 1550 Lot. Based on a three —year review of the parking revenues in the 1550 Lot, the average revenue per space per month has been calculated at $193.78 for the 2.9 month long occupation period. The estimated total parking revenue loss is $444,807. Reduction in other revenues related to the 1550 Lot, such as staging for filming on the Pier or the beach, is expected to be minimal since alternative staging locations may be provided at the 1640 Appian Way or the 1150 PCH lots. Parking revenues to the General Fund for the Civic Center Parking Structure are expected to increase by $60,000, which is the additional amount generated in 2012. If the license agreement is approved by the City Council, the revised revenue projections for the Beach and General Fund will be included in the City's FY 2013 -15 proposed Budget. The 2009 economic impact study reported $200,000 in sales and transient tax increases to the General Fund, which is anticipated again in 2014. All direct City staff time and expenses will be reimbursed by CDS to achieve full cost recovery by the City. Prepared by: Judith Meister, Beach Administrator Approved: C. Karen Ginsberg Director, Department Forwarded to Council: Rod Gould City Manager Attachment A: Proposed Cirque du Soleil Site Plan 11 W �. CIRQV� DU SOl IL. CIRC UE DU SOLEIL. 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