Loading...
SR 06-22-2021 3D City Council Report City Council Meeting: June 22, 2021 Agenda Item: 3.D 1 of 4 To: Mayor and City Council From: David Martin, Director, Administration Subject: SM Pier Corporation FY21/22 – Adopt Proposed Budget and Work Plan; Extend Annual Services Agreement Recommended Action Staff recommends that the City Council: 1. Approve the Santa Monica Pier Corporation Fiscal Year 2021-22 Budget and Work Plan; 2. Authorize the City Manager to negotiate and execute a second modification to agreement #10101 with the Santa Monica Pier Corporation to extend the term through June 30, 2022. Summary The City contracts with the Santa Monica Pier Corporation (SMPC), through a Services Agreement, to manage certain programs, services, and operations at the Pier including street performer monitoring, filming, event rentals, marketing/social media, and the production of community programing. The Council-appointed board is also charged with the development of guidelines pertaining to sponsorship, marketing, events and leasing for Council approval. The Services Agreement requires the SMPC to prepare an annual budget and business work plan to set forth the goals and objectives of the SMPC for the ensuing fiscal year, subject to Council approval. In accordance with Section 4 of the Services Agreement, the SMPC is submitting its FY 2021-22 work plan and budget to Council for its review and approval. Discussion The SMPC’s main sources of income are event rentals and filming followed by the City’s annual grant – all of which have been significantly impacted due to the prolonged effects of the ongoing COVID-19 pandemic. The loss of revenues and the uncertainty regarding when events and promotions would be permitted to return, and under what 3.D Packet Pg. 38 2 of 4 restrictions, has necessitated that the SMPC refocus its FY 2021-22 budget and work plan on stabilizing the organization’s financial footing and focus on service priorities requested by the City. Even as the State continues to reopen all sectors of the economy, the City’s budget projections for FY 2021-22 still reflect the substantial and ongoing impacts triggered by the global pandemic. Accordingly, the City’s funding for the SMPC has been reduced from $250,000 for FY 2020-21 to $200,000 for FY 2021-2022. For the coming fiscal year, SMPC’s work effort will continue to provide essential service priorities such as street performer monitoring, supporting the economic recovery efforts for pier merchants, and coordinating filming and event rentals that comply with County Department of Public Health orders and protocols. Should the SMPC see an improvement in its revenue producing activities or receive arts and culture grants, then reinstituting compliant community programing would be possible under the proposed work plan. The SMPC FY 2021-22 Budget (Attachment A) and Work Plan (Attachment B) describe the modified activities and programs SMPC will undertake in the upcoming fiscal year. In addition, because the Service Agreement between the City and SMPC (Contract No. 10101 CCS) will expire on June 30, 2021, staff seeks authorization to amend the Service Agreement and extend the term through June 30, 2022 to coincide with the 2021-22 Fiscal Year. SMPC Budget SMPC’s FY 2021-22 Budget projects total revenues in the amount of $705,000 and estimated total expenditures in the amount of $790,000 which results in a projected shortfall of $85,000. The budget incorporates the reduction in City funding and the expectation that the COVID-19 pandemic related restrictions will continue to negatively impact revenue-generating events and rentals in the coming year. In addition, the SMPC’s budget comparison from the previous year indicates that FY 2020-21 year-end actuals are projected to close with a $408,781 deficit. SMPC intends to use its reserves to cover the deficits. 3.D Packet Pg. 39 3 of 4 Revenues Projected revenues include: grant funding from the City in the amount of $200,000; facility rentals revenues (deck and carousel rentals and corporate promotions) in the amount of $375,000; filming fees in the amount of $100,000; grant and loans in the amount of $20,000; and other miscellaneous revenues (food and beverage) in the amount of $10,000. Expenditures Projected expenses include: $615,000 for personnel expenses comprised of salaries, benefits and related services; $125,000 for expenses related to facility charges (e.g. Pier Deck and Carousel rentals) including payments to the City; $20,000 for marketing; and $30,000 for contingencies. No funds are budgeted for SMPC-produced Pier programming such as Pier 350, Pride, ROGA (a yoga and running fitness event) and Twilight 2022 Concert Series. SMPC staff will evaluate reinstituting such programming if additional funding sources such as grants or sponsors are identified or if revenue producing rental activities exceed budget projections. SMPC Work Plan The attached FY 2021-22 Work Plan describes the activities and strategies SMPC plans to perform during the fiscal year. Due to the SMPC’s financial challenges, the work plan concentrates on street performer management and revenue generating activities, such as the booking and management of filming, event deck rentals, merry go-round parties and promotional activations on the Pier. Another major focus of the SMPC Board will be continuing to lead three subcommittees focused on Governance & Revenue, Community Engagement, and Programming Priorities, which are assessing recommendations on policy and governance matters related to the Pier. Commission Action The SMPC Board of Directors approved the FY 2021-22 budget and Work Plan on May 17, 2021. 3.D Packet Pg. 40 4 of 4 Past Council Actions Meeting Date Description 07/14/2020 Approval of FY 2020-21 Budget and Work Plan and extension of Services Agreement through 6/30/2021 07/14/2015 Council Authorization of five-year Services Agreement with SMPC. Contract No. 10101 (CCS) Financial Impacts and Budget Actions Pier Funds of $200,000 for the Services Agreement with the SMPC are included in the FY 2021-22 Proposed Budget in the Community Development Department. No additional financial impact or budget action is necessary. Prepared By: Elana Buegoff, Pier Administrator Approved Forwarded to Council Attachments: A. SMPC FY2021-22 Budget B. SMPC FY2021-22 Work Plan 3.D Packet Pg. 41 3.D.a Packet Pg. 42 Attachment: SMPC FY2021-22 Budget [Revision 1] (4579 : SM Pier Corporation FY21/22 – Adopt Proposed Budget and Work Plan; Modify FY2021-2022 Work Plan This document lays out our strategic work plan for Fiscal Year 2021-2022, a year of recovery from an unprecedented pandemic; reimagination of how the Pier is governed; and working collectively with the City, the Pier’s stakeholders and the local and regional community toward a bright post-pandemic future with a specific emphasis toward presenting and maintaining a clean and safe Santa Monica Pier. The Pier is approximately the size of a 3-block city street, upon which are an amusement park, an aquarium, a trapeze school, 8 restaurants, 13 vendor carts, 4 retail shops and a 99-year-old antique carousel that is housed within an official Nationally landmarked building. Fishing and street performance add to the daily scope of activities on the Pier, as well as frequent brand activations, art installations and free-and-open-to-the-public programming. In pre-pandemic years the Pier welcomed approximately 10-12 million visitors, which dropped drastically as the country (and world!) quarantined and exercised strict health and safety precautions for more than a full year. As we recover and cautiously enter life after the pandemic, the Pier is already experiencing the return of attendance levels on a trajectory toward that pre-pandemic level of popularity. This new fiscal year will see the return of our traditional revenue sources – event rentals, activations, filming and sponsorships – all of which were severely impacted during the 2020-2021 fiscal year. This next year presents new challenges, however, in that the level of immediate return of these sources is very difficult to predict as they are dependent upon the broader level of economic recovery for southern California and, ultimately, the country. An added challenge will be a much-needed major construction project impacting the use of the west half of the Pier Parking Deck, our largest source of event rental income. Also, our other highly significant revenue source – a grant from the City of Santa Monica which was drastically cut a year ago – has been further reduced as the City faces its own budgetary constraints. Regardless, the Pier Corporation looks forward to embracing these challenges and remains optimistic about the year ahead. With those financial challenges at the forefront, the Pier Corporation’s primary areas of focus will be in the operations of street performer management and the booking and management of event deck rentals, merry go-round parties, filming and promotional activations. Pier Corporation-produced programming (2021 Twilight on the Pier, 2021 ROGA, 2021 Wake Up with the Waves, 2021 Holiday Window Displays, 2022 Pier 360, and 2022 PRIDE) will largely be put on hold for the next 3.D.b Packet Pg. 43 Attachment: SMPC FY2021-22 Work Plan (4579 : SM Pier Corporation FY21/22 – Adopt Proposed Budget and Work Plan; Modify Annual year due to lack of funding. It is also forefront in mind that planning for the 2022 Twilight on the Pier is in jeopardy as that event is largely planned during the full year prior to its kickoff. Staff will diligently continue to pursue funding sources in order to create the ability to resurrect as many of these programs as possible. Beyond regular operations, the Pier Corporation’s area of focus for FY2021-2022 will be directed toward sharpening the core of how the Pier operates and how it can best serve both the local community and our millions of visitors. As a result of the struggles collectively faced throughout the past year, perhaps the Pier Corporation’s brightest emerging highlight was the development of three study groups designed to address specific issues which became elevated – sometimes dramatically - during the pandemic. The purpose of the study groups was to bring together representative voices from Pier Corporation’s Board of Directors, its staff, representatives of Pier businesses, City staff and members of the community. The study groups’ individual areas of focus are: 1. Governance & Revenue 2. Community Engagement 3. Programming Priorities The work of these three study groups has only recently begun, yet each has already produced great dialogue and, in some cases, immediate results. The next fiscal year will include much more work through these groups and will be integral in shaping not only the Pier’s recovery, but how the Santa Monica Pier operates internally, integrates the community, and celebrates its visitors for the ongoing future. The Pier Corporation is also in the process of updating the Pier’s Brand Guidelines to best reflect the current priorities: a Clean, Safe and Vibrant Pier for all. 3.D.b Packet Pg. 44 Attachment: SMPC FY2021-22 Work Plan (4579 : SM Pier Corporation FY21/22 – Adopt Proposed Budget and Work Plan; Modify Annual 3.D.b Packet Pg. 45 Attachment: SMPC FY2021-22 Work Plan (4579 : SM Pier Corporation FY21/22 – Adopt Proposed Budget and Work Plan; Modify Annual 3.D.b Packet Pg. 46 Attachment: SMPC FY2021-22 Work Plan (4579 : SM Pier Corporation FY21/22 – Adopt Proposed Budget and Work Plan; Modify Annual FY2021-2022 AREAS OF FOCUS Governance & Revenue Composition: • 3 Santa Monica Pier Corporation Board Members • 3 City Staff Members (1 from City Manager’s Office, 1 from City Attorney’s Office & 1 from Office of Pier Management) • 4 Representative from Pier Businesses • 2 Santa Monica Pier Corporation Staff Members Goal: To determine and recommend to Council the best governance and revenue model moving forward. Developments to Date: The Governance & Revenue Study Group determined during their first meeting that the stress and burdens of the pandemic amplified the shortcomings and tensions of the current model of governance for the Pier as well as the revenue model for the Pier Corporation. At present, three organizations play significant roles on the Pier, often with incongruent and sometimes directly competing interests: • Santa Monica Pier Corporation - Manages marketing and events, including Pier-produced programming and rentals by outside entities for events, filming, private parties and corporate promotions; the Pier Corporation Board also has an advisory role in new and extended leases. • Office of Pier Management - Oversees the day-to-day operations of the Pier including leasing, maintenance, planning and public safety. • Santa Monica Pier Lessees Association - Assures that the voices and concerns of the Pier’s business tenants are heard and understood. The study group has begun and will continue to research the governance and revenue structures of other, similar venues and comparing the specific styles (BID, City-governed, Non-profit governed, etc.) as well as look deeper into our current model. Past research projects, including the Pier Corporation’s 3.D.b Packet Pg. 47 Attachment: SMPC FY2021-22 Work Plan (4579 : SM Pier Corporation FY21/22 – Adopt Proposed Budget and Work Plan; Modify Annual 2011 Governance Study and 2015 Access and Use Study, are also being reviewed. Community Engagement Composition: • 3 Santa Monica Pier Corporation Board Members • 1 Member of the City Planning Board • 6 Representatives from Pier Businesses • 2 Representatives from the Santa Monica Community • 2 Santa Monica Pier Corporation Staff Members Goal: To explore, identify and implement tactics that will strengthen the relationship Santa Monica residents and the Santa Monica Pier. Developments to Date: The study group has identified seven concepts: • Local artist installation in Merry Go-Round & windows (with additional emphasis on youth via schools & youth centers) • School year kickoff day • Non-profit go-to meeting space • Social media community member highlight • Resident SM Pier shirt design contest • Happy Hour • Monthly community gathering tradition (example: “First Tuesdays”) Focus moving forward is prioritizing those which can best be implemented as soon as possible and then executing that implementation, with the ultimate goal of building tradition. Programming Priorities Composition: • 3 Santa Monica Pier Corporation Board Members • 5 City of Santa Monica Staff Members (1 from Office of Pier Management, 1 from Cultural Affairs, 1 from the Community Events Office, and 2 from Harbor Patrol) 3.D.b Packet Pg. 48 Attachment: SMPC FY2021-22 Work Plan (4579 : SM Pier Corporation FY21/22 – Adopt Proposed Budget and Work Plan; Modify Annual • 3 Representatives from Pier Businesses • 1 Representatives from the Santa Monica Community • 2 Santa Monica Pier Corporation Staff Members Goal: To identify and prioritize programming that will best serve all stakeholders in the immediate post-pandemic period and ongoing future. Developments to Date: The study group has begun work to formulate a policy for extended events – those which would have a presence on the Pier for more than 10 days – on the Pier Parking Deck. 3.D.b Packet Pg. 49 Attachment: SMPC FY2021-22 Work Plan (4579 : SM Pier Corporation FY21/22 – Adopt Proposed Budget and Work Plan; Modify Annual