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SR-04-24-1979-6I - 308-002-02Santa Monica, California T0: Mayor and City Council Apr:'" 17, 1979 FROM: City Staff APR 2 4 1979 SUBJECT: Recommendation to reject bids received and to authorize direct negotiation for lease of the beach equipment rental concession. Introduction This report concerns rejection of bids received to operate the beach equipment rental concession and the authorization of the City Manager to negotiate directly for lease of this concession from May 15, 1979 through May 14, 1982. Background In response to published Notice Inviting Bids to operate six (6) stands for the rental of umbrellas, chairs, aquatic sports equipment and related items, two (2) responsive bids were received and publicly opened and read April 5, 1979. Proposal packages were mailed to twenty -three (23) pros- pective bidders and notices were advertised in accordance with City Charter and Municipal Code provisions. This call for bids was issued subsequent to the City's termination of the existing concession agreement for lessee's failure to comply with the rental payment and bond requirements. The two (2) bids received were: K & D Beach Rentals First Year: $8,500.00 Second & Third Years: $8,500.00 plus percentage of change in Consumer Price Index plus 5 per cent. Butterfield, Ltd. Inc. All years: $6,000.00 minimum plus ten per cent (10 %) of the gross receipts. Following the bid opening, Butterfield, Ltd. Inc., called for bid results and, at the time was advised that the percentage of gross offer was not con- sidered to be in the City's interest. Shortly thereafter, an alternate bid was received from Butterfield, Ltd. Inc., calling for a flat $11,000.00 first year rental to be increased yearly by the percentage of change in the Santa Mon= -a, California Ap;`1 17, 1979 T0: Mayor and City Council Background continued: Consumer Price Index plus an additional three per cent (3 %). Both the Invitation to Bid and the Proposal Form state "The City of Santa Monica reserves the right to reject any and all bids and to waive all minor irregularities." The Staff considers that its responsibility in this instance lies in obtaining the maximum guaranteed revenue for the City. It should be noted also that Butterfield Ltd. Inc., doing business as Cap'tn Jim Beach Rentals, is the current operator of similar beach equip- ment rental stands for San Diego County and has been favorably recommended. The background information submitted by K & D Beach Rentals cited only previous experience outside of the United States. Alternatives 1. To reject all bids and to issue a new call for bids. This will entail additional expense with no assurance of benefit and also delay that may curtail the first year rental revenue. 2. To accept the bid of K & D Beach Rentals. While adhering to a narrow interpretation of the purchasing code, this will provide a first year rental revenue substantially less than that known to be available ($8,500.00 vs. $11,000.00 or 29% during the first year and at least that much for each of the subsequent years). 3. To reject all bids and to authorize the City Manager to negotiate directly for the beach equipment rental concession. The initial year's rent to be not less than $11,000.00 and the rental for each succeeding year to be increased by at least the percentage of change in the Consumer Price Index plus three per cent (3 %). This will insure the maximum revenue to the City, and give all potential bidders the opportunity to compete. Recommendation It is recommended that all bids received for the beach equipment rental concession be rejected as not in the City's best interest and that the City Manager be authorized to negotiate directly for this lease. It is further recommended that the attached Resolution be adopted. It shall be stipulated that the minimum rental shall be $11,000.00 for the first year Santa Mor a, California i .:)ri1 17, 1979 T0: Mayor and City Council Recommendation continued and that succeeding year rentals shall be increased by at least the per- centage of change in the Consumer Price Index.plus an additional three per cent (3 %). Prepared By: R.N. Aronoff, Purchasing Agent D.T. Arnett, Director of Recreation and Parks RESOLUTION NO.5288 CCS' (City Council Series) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA REJECTING ALL BIDS RECEIVED AND AUTHORIZING THE CITY MANAGER TO NEGOTIATE DIRECTLY FOR LEASE OF THE BEACH EQUIPMENT RENTAL CONCESSION. WHEREAS, the City of Santa Monica has solicited and has received formal bids for the operation of the beach equipment rental concession; and WHEREAS, the City subsequently was made aware of the opportunity to lease this concession for a rate at least 29% higher than the highest bid received; and WHEREAS, the City specifically reserved the right to reject any and all bids both in the Invitation to Bid and in the Proposal Form; and WHEREAS, the City's best interest is served by authorizing negotiation with bidders responding to this proposal NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONCIA DOES RESOLVE AS FOLLOWS: SECTION 1: That the acceptance of any bid formally tendered for operation of the beach equipment rental concession would not be in the City's interest. SECTION 2: That all bids submitted for this concession are rejected. - SECTION 3: That the City Manager is authorized to negotiate directly for the lease of the beach equipment rental concession, at a minimum annual return of $11,000.00 with yearly increases equal to the percentage increase in the Consumer Price Index plus 3 %. APPROVED AS TO FORM: j City Attorney �� ADOPTED AND APPROVED THIS 24th DAY OF April 1979, MAYOR I HEREBY CERTIFY THAT THE FOREGOING RESOLUTION, N0, 5288 , WAS DULY ADOPTED BY THE CITY COUNCIL OF THE CITY OF SANTA MONICA AT A REGULAR MEETING THEREOF HELD ON April 24 , 1979 BY THE FOLLOWING COUNCIL VOTE: AYES: COUNCILMEMBERS: Bambrick, Jennings, Reed, Scott, Swink, Yannatta, van den Steenhoven NOES: COUNCILMEMBERS: None ABSENT: COUNCILMEMBERS: None ABSTAIN: COUNCILMEMBERS: None ATTEST: Agenda Item 6 -I: Presented at this time was a resolution rejecting bids and requesting the City Manager to negotiate directly for beach equip- ment and rental concession. After discussion, Ma or Pro Tempore Reed moved to adopt Resolution No. 5288(CCS) entitle "A RESOLUTION OF 1HE CITY COUNCIL OF THE CITY OF SANTA MONICA REJECTING ALL BIDS RECEIVED AND AUTHORIZING THE CITY MANAGER TO NEGOTIATE DIRECTLY FOR LEASE OF THE BEACH EQUIPMENT RENTAL CONCESSION ", reading by title only and waiving further reading thereof. Second by Mayor van den Steenhoven. Council Vote: Unanimously approved 7 -0 City Council Meeting - April 24, 1979