SR 05-25-2021 3C
City Council Report
City Council Meeting: May 25, 2021
Agenda Item: 3.C
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To: Mayor and City Council
From: David Martin, Director, Administration
Subject: Approval of Amendment to Services Agreement and License Agreement with
Downtown Santa Monica Inc. (DTSM) for Operation of Vending Carts
Recommended Action
Staff recommends that City Council authorize the City Manager to negotiate and
execute a:
(1) Fifth Amendment to Amended and Restated Services Agreement Number 9063
(CCS) with Downtown Santa Monica Inc. to license the Third Street Promenade
for operation of vending carts. This will result in a 20-year amended agreement;
and
(2) Contractual Services Agreement with Downtown Santa Monica Inc., to contract
for unarmed security guard services at Santa Monica Downtown Parking
Structures 1, 2, 3, 4, 5, 6, 9 and 10 in an amount not to exceed $120,000 for one
year, with one-additional one-year renewal option in the amount of $120,000, on
the same terms and conditions for a total amount not to exceed $240,000 over a
two-year period with future year funding contingent on Council budget approval.
Summary
To help support the economic recovery of the Third Street Promenade, Downtown
Santa Monica, Inc. (DTSM) has proposed re-introducing a vending cart program to help
activate certain blocks on the Promenade with additional amenities and services. The
proposed vendor program would be implemented in such a way as to complement, not
compete with, existing brick and mortar offerings, as well as provide opportunities for
new start-up minority and female-owned businesses. The City can grant a license to
DTSM to operate the proposed vending cart program on the Third Street Promenade
through a Fifth Amendment to the Amended and Restated Service Agreement between
the City and DTSM.
Staff also recommends the transfer of previously approved security services funds to
DTSM to provide enhanced security in Downtown’s public parking structures overnight
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where there has been an increase in anti-social activities by authorizing the City
Manager to execute an agreement with DTSM for private security services for Parking
Structures 1, 2, 3, 4, 5, 6, 9 and 10 in FY21/22. The duration of this security services
agreement would be an initial term of one year, commencing July 1, 2021, with a one-
year renewal option on the same terms and conditions.
Discussion
DTSM is under contract with the City to administer the assessment funds from the
business and property-based improvement districts in the downtown area bordered by
Ocean Avenue to the west, Wilshire Boulevard to the north, Lincoln Boulevard to the
east and the Santa Monica 10 Freeway to the south, which provide business support
and resources for the downtown businesses and property owners. The City has entered
into various agreements with DTSM to operate and provide maintenance and
operational services Downtown, including the Third Street Promenade and the parking
structures.
From time to the time, the City needs to amend existing agreements or enter into new
agreements with DTSM to reflect new services or obligations Downtown. For example,
on or about December 2, 2004, the City and DTSM, then known as the Bayside District
Corporation, entered into Services Agreement Number 8405 (CCS) (“Services
Agreement”), setting forth the roles and obligations of DTSM in administering certain
functions and programs in downtown Santa Monica. The Services Agreement provides
that DTSM may advise and assist City in the management of vending cart operations in
the Downtown, and that City may, at its sole discretion, authorize DTSM to directly
manage such vending cart operations.
Proposed Operation of Vending Carts on the Third Street Promenade
DTSM is proposing to activate the Third Street Promenade with vending cart operations
through a sublicense agreement with vendors. From 2005 to 2020, the City had a
license agreement with Provenzano Resources, Inc. (“PRI”) to operate a vending cart
program on the Promenade. This agreement expired in 2020. DTSM staff has
requested the ability to directly oversee a new vending cart program moving forward.
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DTSM desires to prioritize carts as incubators for minority and female-owned
businesses and to help coordinate cart offerings with upcoming Promenade events
(once approved under LA County Safer at Home orders). Additionally, the carts would
help attract a variety of amenities/goods/services to DTSM that would complement the
offerings of existing brick and mortar businesses. This would enable DTSM to quickly
adjust offerings to the needs of the Promenade to ensure that services do not overlap
and are distributed evenly.
Staff seeks authorization to amend the Services Agreement to license the Third Street
Promenade for vending cart use and authorize DTSM to enter into sublicenses with
multiple vendors for vending cart operations. These vendors would be required to
operate with a business license and the City would review and approve all sublicensees
prior to operations. Prior to the deployment of the vending cart program, the City would
require DTSM to provide an operation plan that details targeted amenities and services
of the vending carts and the proposed targeted program for start-up incubator vending
carts for minority and female-owned businesses.
Under the prior license agreement with PRI for 22 carts, the City received as its license
fee: (1) a monthly minimum of $700 per active cart or 30% of actual license fees, except
that weekend artist carts were a minimum of $125 per month or 15% of license fees
collected; and (2) 30% of gross revenues collected from the sublicensee that exceed a
set threshold for each sublicensee.
In the proposed amendment to the Services Agreement, staff recommends allowing
DTSM to charge a flat sublicense fee per vending cart with the option for DTSM to
collect a percentage of the cart’s revenues after a minimum six-month initial term with
each sublicensee. DTSM would charge the following daily flat sublicense fee, subject to
adjustment by DTSM with the City’s written approval: special event vendors at $150 per
day and regular vendors at $100 per day.
Staff recommends that DTSM be allowed to retain 100% of the sublicense fees
(including any percentage of gross revenue) up to $75,000 in consideration of DTSM’s
anticipated expenditure of that amount in on-going economic recovery efforts. (As of
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early May 2020, DTSM has expended approximately $60,000 in economic-recovery
efforts). Once the $75,000 threshold has been met, the revenue DTSM collects through
sublicense fees or a percentage of vending cart gross revenue would be split 50% with
the City’s General Fund. The City could opt, thereafter, to reinvest some of this funding
to support additional DTSM programs and services, as needed.
Service Agreement with DTSM for Security Services Downtown
In February 2021, the City entered into a purchase order with a third-party vendor
through a sole source process to provide unarmed security services at Parking
Structures 1, 2, 3, 4, 5, 6, 9 and 10 through October 2021. Santa Monica Police
Department (SMPD) secured the contract and recently the oversight duties were
transferred to Public Works. Administration of the provision of security services under
the current purchase order has been a collaboration between the City and DTSM, with
the latter providing oversight of daily coordination and activities. However, due to
staffing cuts and budget reorganization, SMPD and Public Works are no longer able to
oversee the purchase order but, effective July 1, 2020, will allocate $120,000 per year
to support a services agreement with DTSM to provide security services.
Starting in July 2021, DTSM has agreed to directly manage the security contract and
integrate the additional services with DTSM’s existing ambassador and maintenance
programs to help ensure a more coordinated approach to addressing the health and
safety of the public and deter incidents of anti-social activity at night in and around
Downtown public parking structures. The City, DTSM, and the existing third-party
vendor would enter into an assignment of the existing purchase order that would shift
administration and oversight of security services obtained under the purchase order
solely to DTSM effective as of July 1, 2021. The City and DTSM would enter into a one-
year contractual services agreement, commencing July 1, 2021, with an additional one-
year renewal option, for a maximum of $120,000 per fiscal year, for DTSM to provide
security services of the parking structures (specifically Santa Monica Public Parking
Structures 1-6, 9, and 10). DTSM would use the third-party vendor under the existing
purchase order to provide these services until the purchase order amount has been
fully-expended. Thereafter, DTSM would subcontract with a third-party vendor, either
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the current vendor or another vendor to be approved by the City. This arrangement
would allow DTSM to quickly address and adjust services as needed to reflect the
security needs of the parking structures.
Financial Impacts and Budget Actions
Re-activation of the vending cart program is expected to increase annual revenues
incrementally as the economy recovers. Revenues will be deposited in account
01700014.409810.
Staff seeks authority to approve funding from the General Fund to award a contractual
services agreement with Downtown Santa Monica Inc. for security services in the
downtown parking structures. .
Agreement Request
FY 2021-22
Budget
Request Amount Department/CIP Account # Total Contract Amount
$120,000 01800004.553220 $240,000
Future year funding is contingent on Council budget approval.
Prepared By: Natalie Verlinich, Senior Development Analyst
Approved
Forwarded to Council
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