To: Mayor and City Council
From: City Staff
Subject: License
Agreement with Provenzano Resources, Inc. for Operation of the
INTRODUCTION
This report recommends that the Santa Monica City Council authorize the City Manager to execute a License Agreement with Provenzano Resources, Inc. (“PRI”) for operation of the Third Street Promenade Vending Cart Program.
The Third Street Promenade is a successful and
vibrant shopping, dining and entertainment areas, drawing visitors from around
the world. A Vending Cart Program has
been an integral part of the overall ambiance and unique character of the
Promenade since its inception in 1989, and has been provided by Promenade
Services. Their License Agreement expired in 2003 and has been in effect on a
month-to-month basis since that time.
Consistent with Council guidelines for leasing and
operation of the Bayside District, in 2003, staff developed a Request for
Proposals (“RFP”) and advertised the Vending Cart Program opportunity. A review team of representatives from the
Resource Management Department and Bayside District Corporation reviewed the
applications, but determined that additional information was required. The RFP was reissued in 2003, and again the
responses were found lacking.
After conducting additional research about vending
cart programs, staff issued a third RFP in November 2004 and received ten responses
(See Attachment A for list of all proposals received). The review committee evaluated the proposals,
interviewed the most qualified responders, checked references, and recommend
Provenzano Resources, Inc. as the most qualified and responsive proposer.
DISCUSSION
PRI is a full service retail real estate consulting
firm specializing in creating, managing, and leasing common area and short term
retail programs for clients. The
managing partners and principals, Ross V. Provenzano and Deborah S. Kravitz,
have over 50 years of combined experience in this and related fields, as well
as a network of highly qualified specialists serving in support of these
functions. PRI has been in business for
over eight years, and their clients included
PRI will partner with Creations at
Number and
Location of Carts: PRI is expected to provide a minimum of 17 retail units, plus
a concierge cart, five food units, and three weekend/artist units for a total
of 26 carts, which will be strategically located throughout the three-block
length of the Promenade. Currently, there are approximately 22 carts on
the Promenade on most days; because the artist units are weekend-only, the
overall number of carts is about the same as those currently in use. Due to storage restrictions, the size of the
carts is also expected to be about the same as those currently in use. Cart locations may vary from the current
configuration, depending upon the optimal placement as determined by PRI and
public safety personnel. Street performer
spaces as currently assigned will not be affected by a new cart placement plan
and, as is currently the case, carts will not be placed near in-line retailers
selling the same or similar merchandise.
Effective Date
of Agreement: The anticipated
effective date of the contract will be July 1, 2005, with roll-out of the new
carts expected to take place in November 2005, so that the operational
transition is completed in time for the holiday shopping season. The License Agreement contains a Performance
Schedule that will ensure this timeframe is met. Immediately after execution of the Agreement,
PRI will submit cart designs to the City and, upon approval, fabricate the
carts and have them delivered. PRI will
also be working with existing vendors and recruiting new vendors for the
program.
License
Fees to be charged ICOs: PRI will
set individual license fees with each of the ICOs based on PRI’s knowledge of
the product being sold and expected profit margin. PRI will set a base license
fee with the ICOs and a percentage license fee for revenues generated above the
“breakpoint.”
License
Fees to be Paid to the City: PRI
will pay the City 30% of the revenues collected or the base license fee, whichever
is greater. PRI will be subject to
periodic audits, at the City’s direction.
Other Downtown Vending Cart Locations: This proposed Vending Cart Program only
applies to vending carts on the Promenade. Currently, there is one other
license for a vending cart that is located at 5th and
Approval
of this License Agreement will result in minimum revenue to the City of
approximately $162,800 per year, for the first five years of the term. This is based on 22 carts at $600/month/cart,
plus 3 weekend artist carts prorated at $125/month/cart. These funds are deposited to General Fund
revenue account 01263.400771. This minimum will increase to $189,300 per year
for years five through 10, which is based on $700/month/cart, plus 3 weekend
artist carts prorated at $125/month/cart.
If the option is exercised for an
additional five years, annual revenue will increase to a minimum of $215,700
per year, which is based on $800/month/cart, plus 3 weekend artist carts
prorated at $125/month/cart. Additionally, the aforementioned rents are
base rents, against a consistent percentage of 30% of revenues collected, with
the greater of 30% or the base being paid to the City, and we anticipate some
additional revenues from the percentage rents.
There are no additional budget or financial impact on the City.
Staff recommends that the City Council authorize the City Manager to execute a License Agreement with Provenzano Resources, Inc. for operation of the Third Street Promenade Vending Cart Program, as described above.
Prepared by: Jeff
Mathieu, Director, Resource Management Department
Miriam Mack, Economic Development Manager
Attachment A: List of firms who responded to the
Request for Proposal on January 27, 2005
ATTACHMENT
A
List of
Firms Who Responded to the Request for Proposals on January 27, 2005
Coast Carriage Management
Edge One Vending Company
General Growth Properties
Martin Rodriguez Events
Mukul Ram
Promenade Carts
Promenade Services, Inc.
Provenzano Resources, Inc.
Retail Details