HomeMy WebLinkAboutSMG - 2008 Management Agreement for Fresno Convention Centercity of ,'�V�
r^�'� REPORT TO THE CITY COUNCIL AGENDA ITEM NO. 9
CITY MANAGER
November 4. 2008
FROM: ANDREW T. SOUL CITY MANAGER
Office of Ne City Manager
SUBJECT: AWARE CONTRACT TO SMG FOR THE OPERATION AND MARKETING OF THE
FRESNO CONVENTION AND ENTERTAINMENT CENTER
KEY RESULT AREA
Economic Development
RECOMMENDATIONS
Staff recommends approval of a ten year Agreement with SMG for the Continued operation and
marketing of the Fresno C mernfion and Entertainment Center (FCEC).
EXECUTIVE SUMMARY
In November 2003, the City Council approved a contract with SMG for to operation and marketing of
FCEC which will expire in December 2008. The Contract resulted in over $5 million of General Fund
savings that have been used to provide funding for the significant capital Improvements that have been
made to the FCEC facilities. Staff from the City Managers and City Attorney's Offices have worked will
SMG to negotiate an agreement far the Continued dislocating and MoAefing services far the FCEC for the
next 10 years. The annual fee to be paid to SMG has remained constant, and provides the City with the
right to terminate the agreement if the actual Net Operating I➢as Trrofd for any year is not equal to or
better than the Net Operating LosslProfR set forth In Me Approved Budget for that year. The agreement
also calls for me City to make annual payments of $100,000 during each of the 10 years as a sedlerimenl
of approximately $2 million of payments made by SMG for Na opereffon of FCEC during the term of the
previous contract That had not been previously approved by the City (see Employee Benefd Cost
Payment section below).
SMG continues to be the dominant leader In the facilities management Industry, currently operating 215
venues Compared to 70 operated by Global Spectrum. This difference in the number of venues operated
by SMG has increased during the last five years. Additionally, SMG continues to maintain a significantly
larger national marketing operation, and has annual operations which exceed Global Spectrum by more
than $156 million ($168.8 mill an compared to $12.6 million). The strength of SMG marketing eRarts hes
UBTECT TO MAYOR'S VETO „clan n I ly r01Pmrl n,
O
resulted in Pollster magazine ranking the Selland Arena and Samyen Theater in the lop 100 venues
worldwide based on ticket sales.
IJSN:(H:idU:r
On November 18, 2003, the City Council awarded the operating and marketing of the Fresno Convention
and Entertainment Center (FCEC) to SMG for the Pedotl of January 1, 2004 through December 31,
2006, with the option of two one year extensions. SMG has successfully operated Me facilities and has
booked a multitude of top performers ranging from the Red Hot Chili Peppers to Placido Domingo as well
as lop Broadway shows. Under to management of SMG, the facility was awarded the 'Prime Facilities
and Destinations Award for years 2006 and 2007. During 2007, Pollstar magazine ranked Me Selland
Arena and Saroyan Theater in the top 100 venues worldwide based on ticket sales.
Since assuming Me operating and marketing efforts In 1993, SMG has made significant contributions to
the operations and management of the facilities. For example, the Fresno Sports Council, which has
been operating since 2005 with SMG, has brought in 108 newswires, booked an saturated 65.000 more
nights for 2006-2012, and generated an estimated $787.000 in room tax. SMG has also assisted with
the reorganization of the structure ul the Fresno Convention and Visitors Bureau and governing Boats of
Directors. In 2005, SMG leveraged his nationwide relationship with Tlckehnaster and worked on behalf of
me Oty of Fresno to renegotiate a contract Mat includes facility fees on all ticketed events.
Over Ms last two years SMG has effe evely managed the facilities duMg major renovation efforts which
began In June W 2006. During this time, 245 event days could not be booked due to Me wrrstadion.
Impressively the facilities were recognized during this time with the Prime Facilities Destination award
and ranked in the lop 100 facilities worldwide as referenced acnes. Phase I of Me renovations were
completed at a war of $18.1 million. Renovation work at the Saroyan Theater Included a remodeling of
the main lobby, theater back of house, plaza area and the replacement of the roof The Selland Arena
remodel entered remodeling the back of house, locker rooms, new seals, and a new root A new
complex chiller was also installed to accommodate all fadlities. Currently phase 11 and III are underway
including a roof for Selland Arena, boiler system, air handler, domestic hot water, HVAC, stage rigging,
ice floor, scoreboard, sound system, hockey equipment eM VIP seafing. The total cast for bon phases
is $9.9 million.
KEY CONTRACT PROVISIONS
Langur of Agreement:
The term of the agreement is ten years, which is consistent with the length of the agreements for other
venues operated by SMG including the Save Mad Center, Me Gardens in Bakersfield, and The Long
Beach Convention Center. The agreement provides The Oty wish the option of terminating Me
agreement d Me actual Net Operating LosaProflt for any year Is not equal to or better Man the Net
Operating Low/Profit set forth in the Approved Budget for that year The right to terminate for falling to
meet the financial budget Is a new provision which was not included in the previous agreement.
Baas Compensation
The base compensation to BMG for services Is based upon the current fee of an annual fixed fee of
$17,300.00, which amount shall be adjusted upward on has first day of each Fiscal Year following the
first complete Racal Year staling July 1, 2009 and ending June 30, 2010 CFirst Complete Fisw1 Year"),
by the percentage change In Me Consumer Price Index —All Urban Consumers (CP( -U) — West Region-
- All Items, as published by the Bureau of Labor Statistics of Me U.S. Department of Labor (the 18ase
Fee'), provided hat such CPI Increase shall net exceed 4.3% in any such Proof Year.
Incentive Fee:
In addition to the fees described above, SMG shall be entitled to an annual Incentive fee with respect W
each Fiscal Year hereunder during the Management Term or Renewal Term based upon its performance
with respect to the qualitative emeria set forth within the contract In no event shall the queltabve
incentive fee exceed an amount equal to twenty percent (20%) of Me tart compensation payable to
SMG in suet Rawl Year taking the Base Fee for such year and dividing it by.8, and Men subtracting the
Base Fee from Me result with such resulting number being hereinafter referred to as the "Qualitative Fee
Cap,).
Client Satisfaction. SMG shall demonstrate quality service to clients of the Family by above average
mtings on exit surreys, Me form and procedure of which vdll be mutually agreed upon by SMG and the
Contract Administrator. (up to 5 points)
Commundvinvevement SMG personnel will actively parimpate In programs and organizations within
the community on a volunteer basis. (up to 5 points)
Maintenance and Operation. SMG shall demonstrate quality maintenance and operation of the Facility
based upon a review by the Owner on a quarterly basis of the condition of Me Facility and the equipment
therein. (up to 5 pointe)
Contract Comolana. SMG shall demonstrate compliance with the provisions of this Agreement based
upon an annual review by the Owner to be completed no later than the and of each Fiscal Year a a
mutually agreed upon checklist of compliance items. (up to 5 points)
Mares. SMG shall demonstrate compliance with Me marketing objectives M Me Cwnerthrough
effective utilization of available resources and shell establish a continuing and cooperative colatlonshlp
with the Fresno Convention and Visitors Bureau as asserted In Paragraph lint of EJMibR'S'. (up to 5
paints)
At the end of each Fiscal Year, Me Contract Administrator will, in its sole and absolute discretion,
valuate and assign a point value, up to the maximum values out above, to SMG'a performance
under each of the criteria above. The amount of the points assigned for such Fiscal Year will be used to
calculate the qualitative Incentive fee payable to SMG for such year as described below. The qualitative
incentive fee for any Fiscal Year shall be an amount equal to the product of (A) the Qualitative Fee Cap
for such year, and (B) a ratio whose denominator is 25 and whose numerator equals Me number of
points earned by SMG far such year In Me Owners discretion as provided above. The paries will meet
periodically, as the Owner determines to be reasonably necessary, during the course of each Fiscal Year
to provide performance updates and to discuss performance issues.
SMG shall not be entitled to be paid an incentive fee in any Fiscal Year as provided above, K the actual
Net Operating LossrPmfK for such year is not equal to or better Man Me Net Operating LosaProlit set
forth in the Approved Budget for such year.
Annual Budget
The agreement establishes the budgmadopted by to City Council for fiscal Year 200&2009 as the
base budget for the agreement. The following annual budgets that are submitted by SMG each year
shall only remain Increases in the Operating Expenses to the extent consistent with Actual Cost
Increases or the percentage increase represented by the percentage change In Me Consumer Price
Index -- All Urban Consumers CPI -U) - West Region - All Items, as published by the Bureau of Labor
Statistics of the U.S. Department of Labor whichever is less. Any Operating Budget showing increases
in Operating Revenue shall be substantiatetl with suffaent documentation. The City Manager shall
require all relevant data and documentation at his sole discretion to substantiate Revenue or Actual
Costs Increases in any submitted budget showing Operal Revenues or Expenses in excess of the
Base Budget All Budgets submitted are subject to approval by the City Manager before their
submission to the City Council for its final approval. If the GIry Manager elects to modify such budgets
submitted by SMG, he or she shall notify SMG in wming of such modifications at least ten (10) days poor
to his or her submission of such budgets to the City Council for approval In bre event that SMG
disagrees with the City Managers modifications of the annual budget, SMG shall have Me right to notify
Me City Council of its concerns and request a modification to the annual budget.
Within thirty days after the end of each Fiscal Year, the City Council shall notify SYS of any changes to
the annual operating budget and the annual cash flaw budget for the succeeding Fiscal Year proposed
by SMG (or provided by the City Manager with his or her changes, as the case may be). The budgets as
Finally approved by the City Council shall be the Approved Budget for the following Fiscal Year.
Employee Benefit Cwt Payments:
During the current contact term, the City presented Na annual budget for FCEC based upon the
benchmarks contained in the agreement. Beginning with the second year of operations, SMG submitted
to the City Managers Office a draft budget which exceeded the benohmaocs containetl in the agreement.
After discussing the proposal with SMG. City staff Informed SMG that the budget being presented to the
City Council, and the cash funding provided to SMG, would be based upon the benchmark amounts
which were ultimately adopted by the City Council as per the agrwmam. During the following three
Years, SMG operated the facilities consistent with the budget May presented, which resulted in SMG
incurring employee benefit costs of approximately $2 million which were not budgeted by the Ciry, nor
were reimbursements from the City requested by SMG during the years that they were incurred.
SMG believes that the City has an obligation to reimburse SMG for Mese expenses as the funds were
spent on the operations of FCEC, that the agreement dendfies that SMG is operating FCEC on behalf of
Me City, and as the expenses were included In financial reports SMG presented to the City, although
without director Indirect concurrence from the Ciry they would be cold. City staff believes that SMG had
a specific obllgabon to operate FCEC within the amounts of the budget adopted by the City Council, and
that they were required to request approval born the City prior to spending any funds beyond that which
was budgeted.
Staff from the City Managers and City Attorney's Glfces have met numerous times with staff and legal
counsel from SMG attempting to resolve this matter without IXlgatlon and in such a manner as to retain
the services of SMG fm the operations a FCEC. The result of these wgobatrons is a staff
recommendation that the City reimburse SMG $1 million of the amount at the rate of $10,000 par year
during each of the 10 years of the proposed agreement The reimbursements will be In monthly
payments, and will be in addition to the annual operating fee paid to SMG over the life of the agreement.
Staff believes this settlement is in the beat Interest of the City, and the meet cost effective way to
maintain consistency and the quality services provitletl overthe term of the previous contract. The net
present value of the payments is submatetl to be $781,000.
In the event this Agreement terminal due b City's breach, the City shall pay, or cause any successor
management company to pay, to SMG the outstanding unpaid amount of the Employee Benefit Cast
Payments existing as of such termination. In Me event that Me City terminates his Agreement due to
SMG's (allure to perform or comply with any terms of the agreement, the City will continue paying to
SMG the Employee Benefit Cost Payments over the remainder of the Amortized Period.
Attachments: Contract
Support letters
Q� CF FPF IF
CIrycum,Qm"I' 9 A
MANAGEMENT AGREEMENT
BETWEEN
CITY OF FRESNO
AND
SMG
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreocird") is dated as of this Il°dsy
of Deeerra er. 208, to be effective on the 1"day of January, 209, by and between the CITY OF
FRESNO. a municipal corporation organized and existing under the laws of the State of California
("Owner" or "City"), and SMG, a Pennsylvania general partnership ("SMG-).
RECITALS
A. the Owner is the owner or lessee offive (5) facilities comprising the Fresno
Convention A Fnteremment Center (Saroyan Thearm, Selland Arena, Rohen A. Schneider
Conference Center, Exhibit Hall and Freie Valdez Exhdbit Hall (formerly known as Exhibit Hall
South)), located downtown in The City of Fresno (individually and collectively, the "Facility'). SMG
is engaged, among other things, in the boniness of providing management services, including
operations and marketing services for public assembly facilities.
B. The Owner and SMG are parties to that certain Management Agreement dated
as or January, 1. 2004 permitting to SMG's management and operation of the Facility (the "OrigirW
Management Agreement "f The Owner intends to work in mutual accord with SMG in order to creme
provision of high qual try management services, thereby enhancing the uw and enjoyment ofthe
Faci ity.
C. The parties acknowledge that, during the term of the Original Management
Agreement, SMG expended approximately $1.90,00.0 to pay for certain Operating Expenses
(which amounts consisted primarily of benefits for employees of the Facility, workers compensation
insurance and liability insurance premiums pertaining to the Facility's operations) in order to ensure
the operation of the Facility for which SMG did not receive reimhursement firm the Owner. It is
understood that the parties herein disagreed over their respective obligations related to these cog and
in furtherance of settling all claims or rights related to them payments of either party herein, Owner
agrees to amortize the snot of $1,000,000.0 of these costs, ("Employee Benefit Cost Payments")
amortized through the Management Term of this Agreement m provided for in Section 5.4 below.
NOW, THEREFORE, in consideration of the foregoing and of the mutual premises,
covenants and agreements herein contained, the panties hereto, intending to be legally bound, hereby
agree as follows:
E Definitions
In addition to the capitalized terms defined elsewhere in this Agreement, the following
terms have the meanings referred to in this Section I:
"Affiliate" -- a person that directly orindirectly controls or is controlled by, or is under
common control with a specified person. For purposes of this definition, 'control" means ownership
of equity secmlties or other ownership interests that represent mare than 500A of the voting power in
the controlled person.
"Actual Cost Increases" -- any increase in SMG's Operation Expense Budget in excess
or of greater amount Met the prior Fiscal Year Budget supported by such documentation as maybe
reasonably requested by the City Manager.
"Approved Budget" —cavy budget submitted by SMG that is accepted by the City
Manager and. approved by the City Council, m accordance with Section 5 hereof
"Capital Equipment" and "Capital Improvements" — any and all furniture, fixtures,
machinery or equipment, either additional or replacement_ and any lard at I building additions,
alterations, renovations, repairs or improvements, the depreciable If he of which, according to generally
accepted accounting principles ("GAAP'), is in excess of three (3) years and any other item of expense
that, according to GAAP, is not properly deducted as a current expense on the books of SMG, but
rather should he capitalized
"City Council"— the City Council of the City of Fresno.
"City Manager" -- the City Manager of Me Owner (defined as the Chief Administrative
Officer m the Charter of the City o Fresno).
"Conformist Rights" -- naming rights, pouring rights, advertisingsigaage (including
vent sponsorships), branding of food and beverage products for resale. premium seating (including
but not limited to suites and club seals) and memorial gifts, to the extent legally possible.
"Contact Administrator" -- the City Manager or histher designee as designated fiom
time to time in writing by the City Manager.
"Containing Contacts" -- the contacts involving the Owner that pertain to the Facility
as desenbed in Paragraph 2Q) on Exhibit "B" hereto and specifically in Exhibit "A" hereto.
"Employee Benefit Cost Payments" -- as defined in Recital "C" hereinabove.
"Fiscal Year" -- a one-year scrod beginning July I mid ending lune 30.
"Laws" --all federal, state, local and municipal regulations, ordinances. statutes, rales,
laws and constitutional provisions.
"Losses" -- any and all losses, liabilities, claims (including, without limitation, claims
for bodily injury, death or damage to property), damages and expenses (including reasonable
attorneys fees).
"Management Term" -- as defined in Section 3.1 hereof.
"Net Operating LossPmfiC —with respect m a Fiscal Year, be excess, if any, of
Operating Expenses for such Fiscal Year over Operating Revenues for such Fiscal Year, in the ease of
a loss and the excess, if any, of Operating Revenues for such Fiscal Year over Operating Expenses lar
such Fiscal Year, in the case of a profit
'Normally Touring Auractnew the shows or events that customarily tour facilities
similar to the Facility in regional or national markets, including without limitation touring family
shows (including without [initiation, ice shows and the cirrus}, touring breadway-type shows,
professional "rodding, sporting competitions and exhibition gamc ematems (including amatom, minor
league and professional), and touring gospel, motivational and religious slows.
`Operating Expenses^ — The Operating Expenses Baled in Section 5.1 ofIbis
Agreement and approved by the City Council as part of the Operating Budget.
"Operating Revenues" -- The revenues listed an Section 5.1 of this Agreement and
approved by the City Cowcil as parr of the Operating Budget.
"Packing Areas' — The multi-level parking swemre located on the southwesa comer of
"M" Street and htyo Street in the City of Fresno. -
"Renewa] TemY — the additional period for which this Agreement may be renewed in
accordance with Section 3.2 hcreef beyond the Management Tenn.
2. Engagement of SMG.
2.1 Subject to the leans and conditions set both in this Agreement. Owner hereby
engages SMG, ono m exclusive boars, as an independent contractor, to manage, operate, and promote
the Facility during the Management Terni %rid Ns, Renewal Tenn, if any, and SMG hereby accepts
such engaeement. In no event shall SMG hold itwhront as, act as, or be the agent curie Owner,
without the Owner s express written authority. In such capacity. SMG shall have exclusive authority
over the day -today operation of the Facility and all activities therein. The standard for performance of
services by SMG will be in accord will, file express provisions of Ms Agreement, and where not
expressed, in accord with generally accepted industry manderds. Without limiting the generality of the
foregoing, the services to be provided by SMG shall include those described on Exhibit "e" attached
hereto.
2.2 Representatives of the Owner shall have the right to enter all hearing of the
Facility to inspect stone, to observe the performance of SMG of its obligations under this Agreement,
to install, remove, adjust, repair, replace or otherwise handle any equipment, utility lines, or other
matters fn, on. or about the premises, or to do any act or t im which the Owner may be obligated or
have tic right to do ander this Agreement or otherwise. In connection with the exercise of such rights.
[lie Owner will endeavor to provide (but is not obligated to provide) advance notice to SMG for
security purposes and to minimize any interference with or disruption of SMG's work ander this
Agreement Nothing contained in this Section is mended or shall be commued to limit any other
rights o11hc Owner under this Agreement nor shall impose or be cons Wed to impose upon the Owner
arty independent obligation to construct or maintain or make repairs, replacements, alterations,
add call; or improvements or create any independent liability for any failure to do so.
3. Management l Term add Renewal Term
3.1 The Management Term of this Agreement shall conumnce on January 1, 2009,
and end at midnight on June 30, 2019, unless earlier terminated pdrsuane to the provisions of this
Agreement.
3.2 The parties may agree to extend the term hereof on such terms and conditions as
the parties new in madly agree in writing prior to the end of the Management Term (tire "Renewal
Fear").
4. SMG's Compensation.
it Mananenenl Fee. As base compensation to SMG for providing the services
hereunder. Owner shall pay SMG during the Management Tema an annual fixed fee of One Hundred
Seventy Seven Thousand Three Hundred Dollars ($177,30D0), which amount shall be adjusted
upward on the first day of each Fiscal Year following the first complete Fiscal Year starting July 1,
2009, and ending June 30, 2010 ('First Complete Fiscal Yew"), by the percentage change in the
Consumer Price Index -- All Urban Consumers (CPI -UJ -- West Region — .411 Items, as published by
the Bureau of Labor Statistics of the U.S. Department of Labor Ithe "Base Fec ), provided that such
CPI increase shall not exceed 4.3% in may such Fiscal Year. To the extent that env Fiscal Yew
hereunder is less than a twelve month period oncluding the initial short Fiscal Year of January 1. 2009,
to one end 0done 30, 2091, such fee shall be pro rated using dee initial fixed fee of $177,300.00 or the
last f sed fee paid from a complete Fiscal Year as adjusted by this provision which fee will be
calculated based upon a function, the numerator of which is Be number of words in such year and the
denominator of which is I2. Such his shall be payable in equal monthly installments due on or before
the last day of each month during such Fiscal Year, and SMG shall be entitled to draw such amounts
from the account described in Section i.2.
4.2 Incentive Pen.
(a) In addition to The fees described in Section 4.1 above, SMG shall be
sedition] to an word incentive tae with respect to each Fiscal Year hereunder during the
Management Term or Renewal Term based upon its performance with respect to The qualitative
comma set fordo at (1) through (v) below during such year; provided, however, that in tic event
shall the qualitative incentive Cee under this Section 4.2(a) for any Fiscal Year exceed an
amount equal in Twenty percent (20%) of the Intal compensation payable to SMG in such Fiscal
Year pursuant to Sections 4.1 and 4.2 hereof (such amount being calculated by (1) Taking The
Base Fee for such year and dividing it by .8; add poen (2) subtracting the Base Fee Gem die
result in clause (I above, with such resulting number being horemaHer referred to as The
'Qualitative Fee Cap'):
to Client Satisfaccom. SMG shall demonstrate quality service to
clients of die Facility by above average ratings on exit surveys. The form and procedure
of el ich is ill be mutually agreed upon by SMG and the Contract Administrator (up to 5
points).
Iii) Communitvinvolvemmt. SMG pemomel will actively
participate in programs and organisations within the community on a volunteer basis
(up to 5 points).
(iii) Ma ntenance said Operation. SMG shall demonstrate quality
maintenance and operation of the Facility teased upon a review by the Owner an a
quarterly basis of the condition of We Facility and the equipment therein (up to 5
Points).
[v) Contract Compliance. SMG shall demonstrate compliance with
the provisions of this Agreement based upon an amend review by the Owner to be
completed no later than the end of each Fiscal Year of a mutually agreed upon chceklist
ofcompliance items (up to 5 points).
(v) MMS. SMG shall demonstrate compliance with rhe
marketing objectives of the Owner through effective utilization of available resources
and shall establish a contracting; and cooperative relationship with the Fresno
Convention and Visitor's Bureau as described in Paragraph I(h) of Exhibit "B" (up to 5
points).
At the end of each Fiscal Year, the Contract Administrator will, in its sole and absolute
discretion, evaluate and assign a point value, up to the maximum values set forth above, to SMG's
performance under each ofthe criteria in (i) through (v) above. Urc amount of the points assigned for
such Fiscal Year wi 11 be used to calculate the qualitative incentive fee payable to SMG for such year as
described below. The qualitative incentive fee for any Fiscal Year shall be m amount equal to the
product of (A) the Qualitative Fee Cap for such year, and (B) a ratio whose denominator is 25 and
whose numerator equals the number ofpoines earned! by SMG for such you in the Owner's discretion
aspmvidedabove- The parties will meet periodically, ax the Owner determines to be reasonably
necessary, during the course of each Fiscal Year to provide prahomm ce updates and to discuss
performance issues.
Notwithstanding anything to the contrary contained in this Section 4.2, SMG shall not
he entitled to be paid m incentive fee in any Fiscal Year aspervided above, if the actual Net Operating
Loss/Profit for such year is not equal to or homer than the Net Operating Loss?nJit set toed m the
Approved Budget for such year.
(b) The incentive fee determined Bananas o Section 42(a) above shall be
payable to SMG wvidim sixty (60) days after the end of the applicable Fiscal Year, teased upon
the Owner's determination of Slyl satisfaction with the qualitative incentive fee criteria as
set forth in Section 4.2(a)(i) through (v) above. Said incentive fee, Happlicabtq shall
commence and Owner shall have the obligation to pay in accordance with this section after the
First Complete Fiscal Year and every Fiscal Year thereafter until the and of the Management
Perm. SMG shall be entitled w an incentive fee for the first six months of operation under this
Agreement equivalent to one Int fof anv incentive fee earned in the First Complete Fiscal Year
which shall be paid at the sumo time as any earned incemive fee for the First Complete Fiscal
Year,
5. Budgets; Bank Accounts.
5.1 Budgets
(a) The parties acknowledge that the annual operating budget and annual
cash flow budget for the Fiscal Year hereunder (July I, 2008, through June 30, 2029), ("fire
Base Budget") has already been submitted by SMG to the City Manager and accepted and
provided m the City Council for its apprmal, which has also been obtained, As partof the
annual plan described in Section o.2 herein, SMG will prepare a proposed atonal operating
budget and annual cash now budget for the First Complete Fiscal Year and each year thereafter
using the Base Budget and consistent with the budget escalation provisions of this Section.
SMG shall submit each Fiscal Year's budget to the City Manager by March 15 of each year,
commencing March 15, 2009_ The proposed annual operating budget prepared by SMG shall
include projected Operating Expenses and Operating Revenues on a line item bests. The line
items shall include, bre not be limited to, th following categories!
(i) Projected Operating Expenses,
(A) Employee payroll. benefits, 401(k) contribution,
relocation costs, bonus and related costs;
(B) Operating supplies (including general office supplies),
(C) Advertising, marketing, group sales, and public relations;
(D) Cleaning;
(EI Data Processing and storage and other related information
Iwhnology;
(F) Dues, subscriptions and memberships;
(G) The Base Fee;
(H) The Incentive Fee;
(I) Printing and stationary;
PI
(J)
Postage and freight;
(K)
Equipment and rental;
ILI
Repairs, maintenance, and equipment servicing
(excluding Capital Equipment or Capital Improvements);
(M)
Security;
(N)
Teleph6ae and communication;
(0)
Travel and enterairunentt
(P)
Employee uniforms and identification;
(Q)
Lxtnnninator and trash removal;
(R)
Training;
(S)
Parking;
(T)
Utilities,
(U)
Accounting and legal fees;
IV)
Commissions and other fees payable to third paries;
(W)
Insurance, to the extent reported in Exhibit "C"of this
Agreement; and
(XI
Taxes, including any possessory btemsuax arising from
any determination by the Entero County Assessor that the license granted herein
under constitutes a taxable interest, except any Possessory use tax as a result of
SMG's self promoting
activities (e.g., booking an event for SMG, whereby SMG
benefits beyond the consideration provided hereunder for IU services).
(ii) Projected Operating Reveeues:
(A)
Ticket Sundays; Restoration Pea;
(B)
Advertising;
(C)
Telephone and fax;
(D)
parking;
(E)
Rentals;
(F)
Equipment charges;
(G)
Food and beverage;
BO
Retail sales;
(I)
Electrical;
(f)
Coming.
(K)
Box Office fees;
(L)
Utilities reimbresenlent(Schindler Conference Center
only);
(M) Interest;
(N) Leases;and
(0) 0thermiscellanimerformsofrevcnue.
Operating Expenses do not include applicable excise, sales, occupancy and use taxes, or
similar governmental taxes. duties, levies or charges collected directly tion patrons or guests, or as a
part ofthe sale price of any goods, sun ices or displays, such as gross receipts,. admission, cabinet, or
similar or equivalent taxes, nor any Roundlet; collected (or to be collected) for the benefit of and pall
in any of SMG's persrrand Fmhemtore, Operating Revenues do nut include (I) mores collected (or
to he collected) for the benefit of and paid to third parties such as event promoters; (ii) parking income
from the Parkins Area, unless City requests, and SMG consents, to operate such parking areas, or (tit)
rent paid due marry sublease related to the Schoettler Conference Center.
(b) The annual budgets refrred to m subparagraph (a) that are submitted
each your shall only contain (i) increases in the Operating Expenses to the extent consistent
with Actual Cost Increases; or (it) the percentage increase represented by the percentage change
in the Consumer Price Index -- All Urban Consumers (CPI-tf) — West Region -- All Items. as
published by the Bureau of Labor Statistics of the US. Department of Labor, whichever is less.
Any Operating Budget showing increases in Operating Revenue shat l be substantiated with
sufficient documentation. City Manger shall require all relevant darn and documentation
required ai his sole discretion to sW stanfiate Revenue or Actual Cost Increases in any
submitted budget showing Operating Revenues or Expenses in excess of the Base Budget. All
Budgets submitted are subject to approval by the City Manager before their submission to the
B
City Council for its final approval If the City Manager elects to modify such budgets
submitted by SMG, he or she shall notify SMG in writing of such modifications at least ten
I Iof days prior to his or her submission of such budgets to the City Council for approval In the
Vomit that SMG disagrees with the City Manager's modifications of the annum budget, SMG
shall have the right m notify the City Council of its concerns and request a modi featien to the
annual budget
(e) Within thirty (30) days after the end of each Fiscal Year, the City
Council shall notify SMG of any changes to the annual operating budget and the amoral cash
now budget for the succeeding Fiscal Year proposed by SMG (or provided by the City
Manager with his or her changes, as the case may be). The budgets as finally approved bythe
City Council shall he the Approved Budges Cor the fallowing Fiscal Year
(d) If if the Capital Equipment and Capital Improvements purchases
authorized by the Owner Or any capital prolec[ containing 'next to or near any portion of the
Facility (0 sh, the Legacy Pryers on the parking lot adjacent to and east of the Selland Arena)
nmtenally impact the use of any portion of the Facility during any Fiscal Year (such materiality
being defined as 510,000.00 or nom); or (h) if there arc Extraordinary Circumstances (defined
as facts or circumstances that are beyond SMG's control) which adversely street Operating
Revenues or Operating Expense" during any Fiscal Year. SMG shall have the night to submit to
the City Manager for submission to the City Council a rm Teed annual operating budget or
annual cash flow budget for such Fiscal Year to the Cis rise In edfiect (A) the impact of such
Capital Equipment and Capital Improvements purchases or capital protects on she Operating
Revenues and/or Operating Expenses; or (B) such other changed Extraordinary Circumstances
If the City Manager elects not to submit such a revised budget to the City Council or proposes
to mndify it SMG shall have the tight 10 petition the City Council for an annual operating
budget or annual cash Base budget. If the City Council does not approve such proposed
arricardedbudgers) or modifies such proposed amended hudget(s)inluMG
m nrwch S
a
disagrees wide, they budget
parties so entitled d mediate the issue consistent with Section I L2
k). Any Budget
budget thm is so approved by the Ciry Council shall be ce,mitaed the
Approved Budget for such year.
52 Receipts and Disbursements
With Ne approval of the Ciry, SMG shall establish and maintain in one or more
depositories one or more operating, payroll and other bank accounts for the promotion, operation and
management of the Facility, which such accounts arm]] be in The name of the. City and will, signature
sullenly in a City -designated affect and iv such employees of SMG as SMG. shall dete,mive. All
Operating Revenues Collected by Sh1G shal l be deposited into such accounts and Operating Expenses
shall be paid by SMG from such accounts. The trading of all of the foregoing accoums shall be made
by Owner to raver all projected Operating Expenses at the Facility, to the extent not covered fiv die
Operating Revenues As part of the monthly meetings described in Section 03, SMG will promptly
repon to the Contract Administrator any material change or variance from the Approved Budget and
any change to the total expenses (as opposed to any particular line item expense) Gam that provided
for in the APPrm ed Budget (unless such change or variance is a recall of, or Offset by, a corresponding
increase N Operating Revenues)
5.3 Capital Equipment, Capital hnurovcmenna
The obligation to pay for. odd authority to perform, direct and supervise Capital
Equipment and Capital bmprovements purchases shat l remain with Owner and will not be considered
Operating Expenses. The annual plan submitted pursuant to Section 6.2 shall include SMG's
recommendation for Capital Equipment and Capital Improvements purchases to be accomplished
timingtthe year and shall be eccompatded by an estimate of the cost ofall such items and projects and
request that Owner budget funds there for In correction with the preparation of such
recommendations by SMG. SMG may need to engage outside professionals, in which nodal SMG shall
obtain the approval ethic City Manager prior to such engagement (which approval shall not be
unreasonable withheld) and the costs of such engagement shall he paid by the City and rot considered
an Operating Expense. Owner shall retain the discretion to detememe whether and to what level to
fund Capital Equipment and Capital lmprovcmems pumbeses to the Facility.
SA SN1G's losiploym Benefit Ct Payments.
Tile parties agree that $1,000,000,00 of the Employee Benefit Cost Payments shall be
paid over a period of one hundred twenty, (120) months ("Amoniadd Period') during the Management
Term on a straight-line basis or acted monthly payments of$8,333.33 on or before the end of each
onto during the Amortized Period, commencing January 31, 2009. In the event this Agreement
terminates due to City's failure to perform or comply with any tame, covenant, agreements or
conditions in any material respect, the City shall pay, or cause any successor management company to
pay, unconditionally cod without ser -off, to SMG the outstanding unpaid amount of the Employee
Benefit Cost Payments existing as of such do mimfion. In the even Nat 6c Ne City commands fee
.Agreement due to SMG's failure to perform or comply with any norms, covenants, agreements Or
conditions in my material respect; or (it) this Agreement is nominated under the cimumatanc ss
described in Paragraph 2(c) of Exhbi I B" harem. Ne City rill continue payi ng no SMG,
urnumboaddly and without setoff the Employee Benefit Cost Payments over the remainder of the
Amortized Period. Notwithstanding the foregoing, in Ne event of the Vindication Of this Agreement
by the City pursuant to Section 10.2 hereof, the City shall not be obligated to pay to SMG (and SMG
shall (pike) the right to receive) Ne next twelve (12) monthly installments of the Employee Benefit
Cost Payment following Ne effective date of such nomination hereunder.
SS Emereencv Reoa'rs.
I any repairs are of as emergency nature, SMG shall i ar edianely contact the Contract
Administrator to inform him ber of the emergency and make such repairs in accordance with the
rel lowing. The City shall reimburse SMGfor ore full amount of The emergency repair by depositing
the same in the Pact lily Opening Account to replenish such amount on lazed film such account. An
emergency repair is defined herein as the repair of a condition which, if not performed immediately,
emotes an immanent danger to newels or property or would, in SMG'a reasonable judgment,
sipladicun0y impact the operational functions of the Facility (including without limitation die holding
of may scheduled event at die Facility) and was net the result of lack of preventative maintenance,
improper operation, or the negligence or willful misconduct of SMG or any of its officers, emplovees,
or agents.
5A Limitation or SMG Liability.
Notwithstanding any provision herein to the contrary, except (i) for SMG's express
indemnification undertakings in Section 5.1; and (it) as provided in the last sentence of Section i.4 and
In Section 10.2 hereat; SMG shall have no obligation to Pond any cost, expense or liability with respect
to the operation, management or promotion of the Facility, and any costs, expenses or liabilities related
to the operation, management or formation of die Facility shall be Operating Expenses_
6. Records, Audits, and Reports.
6.1 Records and Audits_
SMG shall keep full and accurate accounting records relating to its activities at the
Facility and shall provide to the Owner monthly financial statements in a Format agreed upon by the
Owner. SMG shall give the Owner's authorized representatives access to such books and retards
maintained at the Facility during reasonable business hours and upon reasonable advance notice. SMG
shall keep and preseae for at least throe (3) years following each Fiscal Year all sales slips, rental
agreements, purchase order, sales books, credit card invoices, bank books or duplicate deposit slips,
and other evidence of Operating Revenues and Operating Expenses for such period. Additionally,
SMG shall deliver to the Owner annual financial statements withal =cry (90) days after the close of
each Fiscal Year with a stamment that they were prepared in accordance with generally accepted
accomfingplancipics. The Owner shall have tile right to conduct, at its expense, an audit of any
annual report delivered in connection with this Section 6.1 and/or any monthly report delivered
hereunder_ In the event additional casts and expenses relating to field visits to the Facility by auditors
we incurred duc to encs andtor omissions in the financial statements prepared and delivered by SMG
hereunder, SMG shall be Nordic for such additional costs and expenses.
6.2 Annual Elea
D ri the Management Tema and the Renewal Term, if any. SMG shall provide to
Owner an moral management plan, which shall include the annual operating budget and annual cash
flow budget described in Section 5.1 for the next Fiscal Year the annual plan shall include
information regarding SMG's anticipated opemomss for such Fiscal Year and requested Capital
Equipment and Capital Improvements purchases, and anticipated budgets therefer. The annual plan
shall be subject to review, revision and approval by Owner.
fi.S Monthly Reportsa rd Mcennes.
By the twenty-fifth (25a') day of each month during the Management Term aid the
Renewal Term, if any, SMG shall provide to Owner a written monthly report in a form approved by
Owner setting out Facility's anticipated activities and firurmial condition for the upcoming month
and reporling on the prior month's activities Said finances. These repurs must include infomtatlon on
the activities associated with the operation. management, supervisioo and maintenance if the Facility;
the financial analysis of how the Facility is operating; a list of upcoming events; a discussion of
operating and maintenance issues and collectors; anticipated changes in management, operations or
maintenance activities; and other information as appropriate or as req treated by Owner through the
Contract Administrator Additionally,lofxcilitateeommunieatiunbetween SMGmdthe City.SMG
shall have the ability to meet with the City Manager on a monthly basis to present and discuss the
monthly reports, and the City Manager shall make himself or h uselfavailable for such meetings.
7. SMG Employees.
].1 SMG may during the Management Term and the Renewal 'Peron, ifany. select,
train and employ at the Facility such number of emplmyce(e) as SMG deems necessary or appropriate
to satisfy its responsibilities hereunder, and SMG shall have authority to lure, terminate and discipline
any and all personnel working at the Facility. SMG shall assign to the facility a competent general
onager and if 5MG aleck after he date hereof to replace the general manager who is currently
Serving as of the commmnceemnm of this Agreement, SMG shall consult with We Owner with respect to
the qualifications of Ore replacement general manager proposed by SMG and obtain the approval of the
Owner with respect to any such replacement (which approval shall not be unreasonably withheld).
7.2 SMG employees at Facility shall rot for any purpose be considered to be
employees of Owner, and SMG shall be solely responsible for their supervision and daily direction and
control and for setting. and paying is an Operating Expemae. their compensation line Ityl ng federal,
state Slid local income tax withholding) and any employee benefits. Slid all cysts related to their
employment shall be an Operating Exports.
73 During The period commencing on the darn hereof and ending one (1) year after
the expiration or termination of this Agreement, except with SMG's prior written consent, the Owner
will not, for any reason, directly or indirectly, solicit for employment, or lure, any of the senior
management personnel employed by SMG at the Facility, which encompass the general manager,
directorlevelemployees and department heads. In addition to any other remedies which SMG may
have, spedfic performance in the form of injunctive relief shall be available for the enforcement at
pro. harm.
a. Indemnification and Insurance.
&I Indemni Gcatim
To the fullest extent permitted by law, SMG shall indemnifir defend tat SMG'S sole
cast std expense), protect and held hmmless City and each of its officers, officials, employees, agents
and vaIachieve, slid all of such party's representail ves, sucecssors and is sips. and any lender of City
with an interest in the facility (the "indemnified Party(les) ), front and against any and all claims
(including, without limitation, claims for tiaWly injury, death or damage to property), demands,
obligations, damages, actions, causes of action,suits. losses,I imports, fines, penalties, forfeitures,
liabilities, costs and expenses(including, without limitation, attorneys' fees, disbursements and court
costs, and any and all other professional, expert or consultants' fees and costs and SMG's and City's
general and administrative expenses) of every kind and nature whatsoever (individually. a "Claim;'
collectively. "Claims') which may pose paper or in any mincer relate (directly or indirectly) (o, and
only to the extent of, the negligent part, or willful wits. errors and/or omissions of SMG, its principals,
officers, agents employees, narrates) under the supervision of St vendors. suppliers, consultants,
subconsultants, subcontractors, anyone employed directly or indirectly by any of them or for whose
acts they may be liable or any or all of them in perfermiag any work or services to he provided under
this Agreement or in the cause of conducting SMG's activities at or on behalf of the facility,
provided, however, that the foregoing indemnification shall not extend W Claims to the extent that
such Claims relate to C)any breach or default by the City of its obligations under this Agreement; (it)
the fact hat the design or condition of the Facility as of the date hereof is not in compliance -with
applicable Law. including without lmittation the Amencans With Disabilities Act, as amended
("ADA'}; (iii) charges in the design or condition of the Facility after the date hereof that are not in
empliase with applicable Law caused by Capital lmpapvemmits to the Facility contracted For by the
City; ov) any structural defeat with respect to the Facility; or( v) any actor Omission carried out by
SMG at or purmam to the direction or instruction of We City, its agents or mployees_ Forsakcof
clarity, the following is an example of how the foregoing indemnity provision (including the above
proviso) is intended to operate, as between SMG and the Cory— Assume that a third pally Claim is
made against SMG and the City alleging, among ogler things. negligence against SMG and die City
and it is discovered that in connection with such Claim (A) the City's actions eonsuouted a breach of
e of its obligations under the Agreemrmt; and (3) such breach constitutes 10% of We oveml I liability
ofSMG and the City withrespecuo such Claim. In such instance. SMG's indemnification of the City
with respect to such Claim would be reduced by lo% of such overall smooth (related to the City'a 10%
contribution to such liability); however, the City's breach ofsuch obligation would not operate to
relieve SMG from its camisole obligations for the remaining 9o9L of the amoum of such Claim.
82. Subconlmdorhrdemnifrcahon. IFSMG should. subcontract all or anyportion of
the wvorkto heperfomied or servicesto beprovided mderthis Agreement.SMG shallrequue each
subcontractor to Wdeusofy, defend, protect and ]told homeless rhe undetermined Parties in accordance
with the provicalls ofthis Section 8.
8.3, Ormehig Budget. SMG's duty hereunder to indemnify, defend, pmovt and
hold harmless We hrdemnitled Parties at AMD's sole cost and expense pursuant to Section 8.1 and 8 5
hereof includes that such cost and expense will net be paid from funds in the Operating Budget; except
to the extent Wal (i) SMG prevails in its action as against claimant; and (it) such cwt and expense is
not remaered and recoverable by SMG with reasonable due diligence from claimant or hour any
insurance proceeds (including, without l initiation, proceeds hem any policy that SMG is required to
maintain hereunder).
84. Action to Evon or Set Aside Ameemen. SMG warrants that SMG has the
authority to enter into this Agreement and that them is n0 existing court order or judgmem to either (i)
Ordain SMG from entering into this Agreement, (it) or to set aside this Agreement based upon any
p6orcounorderrelatedle SMGdirectlyorindireely. SMG shall also indemnify, hold harmless,
protect aid defend the laderunilied Parties at SMG's sole cast and expense from and against all Claiming
arising from all suits of law or actions of every nature to enjoin SMG Tom Opening into this
Agreement or to set aside this Agreement. Notwithstanding Section 83 above, such cost and expense
w ill not be paid from fwd in the Operating Budget_
8.5. Wprranty and Indemnification Against Af tagement. SMG warrant that the
nmminds, equipment, devices or processes (including without limitation, any gradware or components
of any dmhte a system) provided by SMG are bee from trademark, capyn ght and patent
infringement. SMG shall al so indemnify, held harmless, PTO lost and defend the indemnified parties
at SMG's sole cost and expenses Tam and agaimt all Claims adding Tom all suits of law or actions of
very name for or On account of the Infringement 51 my patents, trademarks or copyrights by reason
of the use of any proprietary materials, equipment, devices or processes, originally incorporated, or
provided and uaN, by SMG in the performance of the work or the services Provided order this
Agreement.
8.6 Insurance. SMG shall secure and deliver to the Owner prior to the
commincroncent of the Management Term hereunder and shall keep in farce atoll times during the
Management I em and the Renewal Term, if mry, such insurance policies as are described in Exhibit
"C" hereto.
9. Assignment
Neither this Agreement nor my of the rights or obligations hereunder may be assigned
by either puny hereto withoutthe prior written consent of the other pany hereto. For sakcof clarhy,
the parties acknowledge that the foregoing does not preclude the assignment by SMG of its dghis to
receive its management and incentive fees hereunder to its lendat as col lateral security fur SMG's
Obligations under any credit facilities la oaidd to it by such lenl provided that such collateral
assignment shall not in any event cover SMG's rights to manage, promote or operate the Facility
hereaunder.
It. Termination.
10.1 Tenrwhation Upon Default.
Either party may terminme this Agreement upon adefault by the other petty hi munder.
A party shall he in default hereunder if (i) such pretty fails to pay any stun payable hereunder within
Thirty (30) days after same is due and payable; or (ii) such party fails in any material respect to perform
or comply with any of the other temps, covenants, agreements or conditions hereofand such failure
Continues for more than sixty(60)days after women notice thermf from the other parry. In The event
that a default (other than a default In the payment of money) is not reasonably susceptible to being
Cored within the sixty (bre) day period, the demoting party shall not be considered in default if shall
within such sixty (00) day period have couuneneed with due diligence laid dispatch to cure such
default and thereafter completes with dispatch and due diligence the curing of such default.
10.2 'formulation For Far lure To Meet l he Bubble
'fire City shell also have the right to terminate this Agreement by giving SMG ninety
(9m) days written active, if the actual Net Operating Loss profit for any Fiscal Year haremtden as set
fonh in the animal financial statements described in Section fi 1, is greater than for less than, as the
case may bel the Net Operating Li so/ProN set forth at the Approved Budget for such year (the
"formulation Shortfall"). In the event of such combination, fie City shall continue to pay SMG die
Employee Betmfa Cost Payments over tire 8stnorlizod Period, unconditionally and without set-off;
however, if the amount of the Termination Stanfill is greater firm 5100,000,00, their the City shall not
be obligated to pay to S%IG (and SMG shall forfeit tic right to receive) the next twelve p2) monthly
installments of the Employee Benefit Cost Payment following the effective date of such termination
hereunder. S MG shall not be considered to be in breach of this Agreement solely by reason of the
existence of a Termination ShorHal1.
10.3 Effect of Termination or Expurial on
(a) In the event his Agreement expires or is automated, (d all Operating
Expenses deduced and approved by Cooper within the Approved Budget incurred or committed
sot prior to the data of expiration or termination shall be paid using funds on deposit at the
accounts) described in Sections 52 and to die extent such fords are not sufficient, the Owner
shall pay the balance of such expenses; and (it) Owner shal I promptly pay SMG all fees earned
in the dam of explosion or terrwnation arm ret to rights of set off in the avant of a breach of this
Agreement by SMG (,the fees described in Sections 4 1 and 4.2 hereof (as applicable) being
soft cid to prorahoa).
(bl Upon termination or expiration, without any hundreds action on the pan of
SMG or the Owner. the Owner shall, or shall cause another mmagement company retained by
It to, accept he assig uncnt of SbfG's rights, and examine and perOrm all ofSMG's obligations,
sr ng after the date of expiration or tcmtibramom of this Agreement, under any licenses,
occupancy agreements, rental agreements, booking ctmmitmeats, advertising agrcempts,
compact agreements, and any other contracts rebound to the Facility which have been
executed by SMG heaander, except (A) to the extent that any such license, agreement,
commitment or contract was executed by SMG in violation of any ofife restrictions applicable
to SMG's right to execute such licenses, agreements, commitments or contracts captured in
this Agreement, and (B) for any such license, agreement, commitment or contract to which the
consent of the other party thereto is required for such assignment and assumption poets such
consent is obtained lin the ruse of any such consent, SMG will use commercially reasonable
eRons in obtain such consent slid the City will cooperate in any reasonable moaner with SMG
to obtain such cossnn), and all further obligations of the parties hereunder shall tarantula
except for the obligations that are expressly intended to survive the termination or expiration of
this Agreement, including without limitation, Sections 5A. 7.3, 1(12. 10.3 and IOA.
10A Surrender of premises.
Upon lamination or expiration of this Agreement, SMG shall amender and vacate the
Facility upon the effective date ol'such termination or expiration, The Facility and all equipment mid
furnishings steal I be returned to Owner in good call reasonable wear and tem excepted, to tic extent
funds were made available therefor by Owner. All reports,records, including Financial records. and
documents maintained by SMG at the Facility minting to this Agreement other than materials
containing SMG'a proprietary information or property shall be immediately surrendered to Owner by
SMG upon termination or expiration.
U. Miscellaneous.
ILI Certain Representation and Warrntlea.
(a) Ownernproesents and warrants to SMG the following:( i) all required
approvals have been obtained, and Owner has fall legal right, power and authority to enter into
and perform its Obligations hecwmder'. (it) this Agreement has been duly executed and
delivered by Owner and constitutes a valid and binding obligation of Owner, enforceable in
accordmme with its terms, except as such erdbmeability may be limited by baNrup cy.
tsets ency, reargarriatieo Or similar Laws affecting creditors' rights generally or by general
equitable principles, and (iii) the exceeded and delivery Of this Agreement will um violate or
cause a breach (with or without notice or the passage of time) under any agreemenl m winch
Owret is aparty, including, without limitation, the City Agreement.
111 Carrier Other Provisions.
(a) Usebvtbe Cifs City use of the Facility shall if be booked in advance
upon reasonable notice to SMG: (a) not in conflict with dates previously booked by SMG for
vents, end (iii) not co« east of Normal ly Touring Attractions (other than for occasional fiend -
raising events cooNlnatedinadvance with SMG). The City shall provide SMG credit as
Operating R %clan the published rental rate for any City uec ofthe Facility. SMG, however,
shall invoice, and the give shall promptly pay, SMG for direct out-of-pocket expenses incurred
In connection with the City's use ofthe Facility. Such direct eutof-pocket expenses shall
include, but not be limited to, employee time, utilities, clean-up, foal and beverage service, and
linens. Upon request of City through the Contract Administrator SMG shall provide to City a
list of available dates for City use of the Facility To the extent than SMG bas an opportunity to
book a revenue producing event on a date which is otherwise reserved for use by City, SMG
may propose alremative dams and other incentives for City to consider in rescheduling its
vent, and City shall use reasonable commercial efforts to attempt to reschedule such event,
provided, that City shall not he obligated to reschedule its event. The City may from time -to -
lime direct SMG to book events al the Facility for organizations or entities unaffiliated with the
City_ The City shell provide SMG with reasonable notice of such events and make, or cause to
be made, immdiam payntcnt for all expenses, including, but not limited to, rental charges and
out-of-pocket expenses, incurred to connection with such use.
(b) Non Compendia , SMG agrees that it shall not, directly or indirectly,
participate in or encourage development of, own, manage Or Provide consulting or other
management, marketing or promotion services, whether as a principal. partner, joint venture,
ember, conwlwn4 agent, independent contractor, or stockholder of any company or business
with reaped to the following sped be venues'.
(1) Cl IV of Fresno Fresno State University's proposed hotel
conference center.
(id Indian Property: Indian awning tetters and future facilities
within Kings, Madera and Fresno ( owries_
(iii) City of Clovis: Clovis cenrerllheama
(iv) County of Fresno: Ary com enroll center facility or other
facility with exNbition, meeting and banquet space (excluding for sake of clarity, the
Savemad Centelat Fresno Stare University).
in CoonenlnNMediafoNlteafnn. 'rheparliesdenotocooperatewith
each other in We management and operation or me Faci lhv pursuant to the terns hereof. In
keeping with this cooperative spirit and record any dispute arising hereunder will fast be
referred to lbs parties respective agents or oftesemalIves prior to either party initiating a legal
snit, who will endeavor in good faith to resolve any such itispuos while the Writs of their
authority and whim forty-five(45) days aper the totmucneemem o f such discussions_ If any
dispute between the parties has not been resolved pumaanuo such a good faith resolution, the
parties will endeavor to settle We dispute by ronbindmg mediation under the then current CPA
International Instimtc for Conflict Prevention slid Resolution ("CPR") model procedure for
mediation of business disputes or, if such model procedure no longer exists, some other
mutually agreeable procedurethe parries agree (hat any mediation proceeding (as well as any
discussion pursuant to paragraph (a) above) will constitute settlement negotiations for purposes
ofthe federal and state rales of evidence and will be treated as non discoverable. confidential
.and privileged communication by tbeparties and the mMiator. Noccom raphic,vetudor
audio record will Ferrite orally mediation proceedings or such discussions All conduct.
statements, promises, offers and opinions made in the course of the mediation or such
discussion by any party, its agents, employees, representatives or other invitees and by the
mediator will not be discoverable nor admissible for any purposes in any litigation or otter
proceeding involving the parties and will not be disclosed many third party. Participation in
such nonbinding mediation shall in no way wove a puty's right to pursue any and all available
judicial remedies_
W) Independent Computer. 11, the famishing of the services provided for
herein, SMG is acting as an independent contractor. Neither SMG, nor any of ou officers,
dates, agents or employees shall be deemed an employee, partner, joint venture or agent of
Oper for mty purpose. However. Owner shall retain the right to yen by that SMG is
performing its respective obligations in accordance with Ota terms hereof,
(r) Entre Agreement Amendments. Me Agreement contains the entire
agreement between elm parties with respect to the subject matter hereof and supersedes all prior
agreements and understandmgs with respect thereto. No other agreements, representations,
warranties or other matters, whether oral or written, will be deemed to bind the parties hereto
wild respect to the subject matter hereof This Agreement shall not be altered, modified or
amended in whole or in part, except in a writing executed by each of the parties hereto.
10 Force Ma'eu a No patty will he liable or ponsble to the other party
for any delay, damage, loss, failure inability to perform caused by 'Force Majeure if notice
is provided to the other parry within ten (10) days of date on which such party gains actual
knowledge of the event of "Force Majeure" that such gamy is unable to perform. The tens
"Force Motion' as used in this Agreement means the fol lowing: an act of God, strike, war,
public rioting, lightning, fire, stone, peed, explosions, inability to obtain materials, supplies,
epidemics, landslides, ligbapung.stomis, earthquakes. floods, sources, acuhoms, civil
disturbances, explosions, acts of terrorism, breakage or accident to machinery or lutes of
equipment, temporary failure of equipment, freezing of equipment and any other cause whether
of the kinds specifically enumerated above or otherwise which is not reasonably within the
control of the party whose performance is to be excused and which by me exercise Of due
diligence cum id not be reasonably prevented or overcome
(g) Bra int Lt on Sac d i$o;simr. This Agreement and the rights
end obligations set faith herein shall inure to the benefit of, and be binding upon, the paries
hereto and each of their respective successors and permitted assigns.
(hl Notices Any notice, consent or other communication given pursuant to
this.Agreement will be in writing and will be effective either (a) when delivered personally to
the party for whom intended, (b) on die second business day following mailing by an overnight
sooner service that is generally recognized as reliable; (c) on the fifth day following mailing by
cedified or registered mail, return mwipt requested, postage prepaid, or (d) on the date
transmitted by telescopy as shown on the telescopy confirmation therefor u long as such
telecopy transmission is followed by mailing of such notice by certified or registered mail,
return receipt requested, postage prepaid, in any cue addressed to such party as set forth below
Or as a party may designate by written notice given to the other parts in accordance herewith.
To Owner
City of Fresno
Atlomion: Andrew T'. Souza, City Manager
2600 Fresno Street. Roam 2064
Poison. California 93721
Tulecopy: (559)621-7776
To SMG
SMG
701 Market Street Suite 4400
Phdadolplincloarcylvania 19106
Attention: President
Tclecopy', (2[5)592 ratio
With a copy to:
Suadley, Nonan, Stevens & Young
3600 One Conducive Square
Philadelphia. Pennsylvania 19103
Attention'. William R. Sasso, Esq. o
Steven A. Stolid, Esq_
Telecopy, (215)564-8120
Baker M.anock &Jonson, PC
5260 North Palm Avenue, Fourth Floor
decade, California 93704
Attention: Kenneth J. Price, Esq.
'I elecopy: (559)432-5620
(1) Govartum Law-Coudemarta This Agrecidentwillhegovemedbymtd
nnstrved in accordance with the internal Laws of the State of Cabfomia, without giving effect
to otherwise applicable principles of conflicts of law. Venue for purposes of the filing of any
return regurdi ng the enforcement or interpretation of this Agreement and any rights and duties
hereunder steal l he Fresno County, California. Tlrls Agreement may be executed ho nee or more
ounterpa h, each ol'wInch shall be themed an original copy itFthis .Agreement, and all of
which, when taken together, shall be deemed to constitute but one and the same agreement.
G) Severubil' v. "Phe invalidity or unenforceability ofary particular
provision, or pan of any pmvisiort of this Agreement shall not affect the other provisions or
pans hereof and this Agreement shall he construed in all respects se if such invalid or
unenforceable provisions or parts were omitted.
(k) Non-W'aaer. Afmiwebyeitherpmytowkeanyactionwitbrespectto
any default or violation by the other of any of line terms, covenants, or conditions of flus
Agreement shall not in any respect limit, prejudice, diminish, or constitute a waiver of any
rights of such patty in act with respect to my prior. conotrapormsecus, orsubsequent violation
or default or with respect to any continuation or repetition of the original violation or default.
(1) Attorney's Fees If either party is required to commence any proceeding,
amilm8on or legal action to enforce or interpret any Nov. reversal or condition of this
Agreement. the prevailing party in such proceeding or action shall be entitled to forever from
the ether parry its reasonable attorney's fees, casts and legal expenses-
(m) Governmental Committee. to providing the science required under this
Agreement. SMG shall at all times comply with all applicable taws now in force and as they
may he enacted.issued, or amended during the test offers Agreement Huwevep.SMGshall
have no Inability under this Agreement therefor, if Such activity requhes any Capital
Impmvements or Capital Equipment purchases, unless Owner provides funds for such Capital
Impmvements mid Capital Equipment pmrhasas. SMG will promptly provide notice to line
City if SMG becomes aware of say condition such non-compeance that requires Capital
Improvements or Capital Equipment purchases N mmaly the sane, provided, however, as soon
US Part Call) ic afar the date hereof (but no Inner than six (b) menthe eller the date loccon and
on Such other basis thereafter as the parties may mutually agree, SMG and the City will
cooperate in, and mutually agree upon, the planning and implementation of an inspection of the
I acility for any such noncompliance issues to be perforated by a qualified hard parmies)
undfor qualified City employees or subcontractors (including without limitation a Phase 1
envormummal analysis of the Facility), lite costs of which inspection shall be provided for in
the applicable Approved Budget.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
as of the day and year first thus Polar.
CIM' OF FRESNO t"Owner')
a
ipal corporation
By:
Name
Andrew m sni,7,
Title
rit., n
Date:
IL- l^��pO S'
SMG
a Pennsylvania
general partnership
By
lA�
Nam
1a
title'.
Prete dept a„a CPO
Date:
_ it -koc
ATTEST:
REBECCA E. KLISCWOEPUTY
CITY CLERK
By 2Ose
Title: rcYef
Data: 14 0'e
Name: David P. Hale
Title. Chief Chief Asslstanl Cllr AttornevA�orney
Da"; 'LZ-liy 4
Addresses
City
City of Fresno
Attention: Andrew T. Souza,
City Manager
2600 Fresno Street, Room 2064
Fresno, CA 93721
Phone: 559621-7762
FAX 559-621-7716
21
Operator
SMG
Attention: Wes Westley, President & CEO
701 Market Street. 4th Floor
Philadelphia, PA 19106
Phone: 215-5921604
FAX: 215-592-0361
Coov:
Baker, Manock & Jensen
Attention: Kenneth J. Price, Esq.
5260 N. Palm, Suite 421
Fresno, CA 93704
Phone: 559 32-5400
FAX: 559-432-5620
EXHIUI'I'-A"
Cmntiaaiae Contracts
1. The License Ageemenl between SMG, the City of Fresno, and Fresno Hockey
Club, LLC, dated November 30; 2007, in which, among other things. SMG and the City grant Fresno
Hockey Club, LLC, a license to play Fresno Falcon's hockey games at Selland Arena.
.Additionally, SM(Ts duties to perform, discharge said comply with the obligations set
Forth in the following Continuing Contracts shell be limited as follows
-
2. 'Sublease Agreement relating to Caro baren Facilities' between Cily and
Uniwcll Fresno Hotel, successor-mimmerrest in Joint Q. Hammon Hotcla L.P., snccessoron-interest to
John Q. Hatnmons, d'b'a Joint Q. Hammons Indmrries, dated September 15, 1982, shall he limited to
performing, discharging and complying with such agreement to the extent it pertains to (i) the te®ot's
Curb ell Fresno Hotel) use of the Facility, including, without limitation, tenant's payment of their
share of Ni lilies and tenant's booking of events at the Facility; or (it) either City s or such tenant's use
or operation of any portion of the ` Parking Ands' "as defined in the Agreement with Operator.
Notwithstanding anything to the contrary in the preceding sentence, Operator's msponsim lilies
herewdcr shall not include collection of rent payments which shall be paid directly to City and not
included in Revenues except to the extent Wal such rent payment is increased solely for leasing of
.additional space within the Rmber A. Sehoealer Conference Center of the Facility.
A -I
EXH I III "B"
Services
1. Without limiting the generality of Section 2.1 of this Agreement. SMG shall
have, without (except as oNerwisc expressly noted below) any prior approval by Owner, sole right and
authority to:
(a) Provide Or cause to be provided. through itself and/or one or more of its
Affiliates and/or third party subcontractors, booking services, catering and concession services,
decorating sen ices, maintenmme services, and at I other services in connection with the
management, promotion and operation of the paciddT however, a-ith respect to the Robert A.
Schierl Conference Center, the parties acknowledge that (I I SMG's duties will only
encompass the obligations as set forth in Item 2 of Exhibit A; and (2) upon ninety (90) days
prior written notice by'the Owner to SMG, the Corer can elect to remove the Robert A.
Schedules- Conference Canter fr0or the definition of the Facility hereunder and upon the
effective date of such election, SMG shall have no further obligations or duties with respect to
such Facility. Without limiting the genaalityofthe farseeing, SMG shall (A) conduct daily
facility Inspections by its on-site staffand "Mystery Shopper Program" inspections at (cast
twice in each Fiscal Year and shall parents the Contract Administrator a copy of the Mystery
Shopper reponso wilhhi ten (10) days of its receipt by SMG to allow the City to monitor hew
the Fact lity is managed and maintained; and (B) subject to die approval of the Owner and the
Owner's bond counsel, develop. implement and manage a system for selling Commercial
Rights at or in connection with die Facility, et then niece or through a subcontracted entity,
provided that the Owner approves such subcom it ctor in advance (aelhlch consent will net be
memassalabiv withheld) Are amounts due to a third party selling the Commercial Rights shall
be an Operating Expense
(b) Negotiate, execute in its own nmnc as an independent contractor, deliver
mrd administer any and all licenses, occupancy agreements, rental agreements, booking
commitments, advertising and sponsorship agreements, coloring and concession agreements,
decorating agreements, supplier agreements, service contracts and all other contracts and
allcements In connection with the management, promotion and operation of the Facility,
subject to (I ) the fact that if any such license, agreement, commitment or come= other than
those Involving dee license, lease Or rental of any of the Facility (or any portion Iheteol) in the
ordinary course has a term that extends beyond the remaining Management Teem. such license.
agreement, cmmrdtmcnt or contract shall he approved in advance by Comer (which approval
shal I not be unreasonably withheld), and (2) the provisions of subsection dd below. In
connection with any licenses. agrecrimms, commitments or contracts for the Facility, SMG will
elude in such documents the right of SMG to assign all of its rights and obligations under
such licenses. agreements, commitments and contracts to the Owner (Or to any successor
management company connected by die Owner) upon the expiration or tarminatlon of this
Agreement, mid upon such expiration or termtnatou, such assignment and assumption shall
automatically occur as provided in Section 10 9(6) hereof.
M
(c) patch Iter and adfusI prices, mics and rate schedules for the aforesaid
licenses, agreements and contracts and any other instruments relating to the Facility to be
negotiated by SMG in the course of its management, operation and promotion of the Facility.
In determining such prices and rate schedules, SMG shall evaluate comparable charges for
similar goods and services at similar and/or competing facilities and shall consult with the
Owner about, and shall obtain the approval of the City Council with respect to, any adjustments
to the rate schedules at the Factidy to be made by SMG:
(d) To the extent that Operating Revenues or feuds supplied by Owner aro
made ayai table therefor, (1) maintain the Facility in the condition received, reasonable wear
and tear excepted; and (2) rent, lease or purchase all equipment and maintenance supplies
necessary or appropriate for the operation and maintenance of the Facility. provided that Owner
shall he responsible for tmdertaking all Capital Improvements and Capital Equipment
purchases as provided in Section 59;
(e) To the extent that Operating Revenues or funds supplied by Owner me
made avunable therefor, pay, mvhen due all Operating Expenses from accounts established
pursuant to Sections 5 3 of this Agceemeta;
(p) .After consultation with and approval by the Contract Administrator and
the City Aniomey. insdmte on behalf of the Facility and dee City at the reasonable expense of
the City or as an Operating Expense, with counsel selected by SMG, such legal actions or
proceedings as SMG shall deem necessary or appropriate at connection with the operation of
the Facility, including, without limitation, to collect charges, rents or other revenues due to
SM(i w manager of the Facility or In cancel, terminate or sue for damages under, any license,
use, advertisement or concession agreement for the breach thoreofor default thereunder by any
licensee, user, advertiser, or concessionaire at the Facility;
(g) Engage in such advertising, solicitation, and promotional activities as
SMG deems necessary or appropriate to develop the potential of the Facility and the cultivation
of broad community support;
(h) Work with dee Fresno Convention and Vsimr's Bureau in such manner
as requested by the Owner.
(i) Operate or cause to be operated the Parking Areas for use as a pay
parking let for automobiles and for no ether use unless approved byte Owner. Parking Arca
shall be operated and maintained as mil class parking facilities open to public use, add wide
established rates approved by the Owner and shipped by sufficient personnel to ensure the
prompt and efficient movement ingress and egress of traffic. Overnight parking shall not be
permitted by SMG, except as specifically required to accommodate an event on a temporary
basis in the course of operations at the Facility;
6) Except as expressly limited on Exhibit "A" hereto, pedom, discharge
and comply with the obligations of the Owner expressly set forn on the contracts existing as of
the date bereofrelating to the Facility listed on Exhibit "A" hereto (collectively, the
M
"Continuing Contracts") "1'hc Owner shall provide SMG with topics of or access to any of
such Continuing Contracts,
2. SMG acknowledges that the Facility is financed in large part with the proceeds
of ane or more sencs of City bonds I"Bonds"7, the interest of which is intended to be excluded Rom
gross income for federal income tax purposes. In order to assist Owner in preserving the m ucena m
nature of the Bonds, SMG ackamwiribes and agrees to that contained in this section.
(a) In determining whether to gwl or withheld any approval of any contract
for which approval of Owner is required under this Agreement, Owner may consider the effect
of such contract for federal tax purposes on the exclusion of interest on the Bonds for federal
income tax purposes.
(b) m addition to any other contracts requiring the approval of Owner, each
of the fallowing described contracts must be approved by Owner before execution thereof by
SMG.
(i) Any contract relating to the Facility which grants a leasehold
interest, term for years, or other real estate interest in the Facility (older door a
revocable license), or gangs a longterm right to use the Facility on a basis di motor
from that of the general public.
(it) .Any contract for provision of services related to the Facility
must, to the extent applicable, comply with the pron isions of Revenue Procedure 97-13
and the misrIerclabons Hereof
(iii) Ally C on(In I for the use Oft he Facility for shows,Programs,
cunscritunes and other event, unless such contracts provide Poer use on a fixed [ Innis
fexcludvm Os sale of merchandise or concessions in respect therein which may be on a
percentage of merchandise or concession revenues), determined on an event by event
bras and where the right of the user to the Facility are those of a transient occupant
rather than full legal possessory interest in the Facility as a lessee.
(c) If required by band counsel to Owner or counsel to the underwriters,
SMG agrees to: mase modifications to this Agreement so that he same is, in the opinion clinch
counsel, a qualified management contract for purposes of Revenuc Procedure 97-13
promulgated by the Internal Revenue Service. In the event such modifications shall materially
increase SMG -s obligations henchman or materially decrease SMG's right or economic benefits
hereunder, SMG and Owner will cooperate with each other in goad faith for a period of thirty
(30) days in an effnrt to amend the Ageement and preserve the economic benefits of both
parties hereunder in a manner that is satisfactory to SMG, Owner and Owner's band counsel,
each acting in their sale discretion. To the extent the pantos do not amend this Agreement
ix third such 30 day period, SMG shal I have the right to terminate this Agreement upon not less
than ninety (90) days prior written notice to Owner, which right may he exercised by Ss4G
providing such onsimennin notice to Owner is within twenty (20) business days after expiration
of the 30 day negotiation period. If SMG timely exercises its right of termination under this
ME
Paragraph 2(c), SMG shall continue to perform its ohli gations hereunder through the date of
termination and Owner shall continue to pay SMC all of its management Fees, an a pmratM
basis for the then current Fiscal Year, mrough the date of termination in accordance with this
Agreement,
M.
"EMIlli1'f "C"
Insurance
(a) Throughout the term of this Agreement. SMG shall acquire and maintain in full
force and effect all policies of insurance required hereunder with an insurance cumpanylias) either (i)
admitted by the California Insurance Commissioner to de business in the State of California and rated
not less than 'A VB" in Bests Insurance Rating Guide; or (it) authorized by the Owner's Rink
Manager, The following policies of insurance are required:
(1) COMMERMI, GENERAL LIABILITY insurance which shall include
Weaker contractual. mdepeodeat contractor's liability, personal injury and advertising liability.
pmducu lord completed operafiom covuages, bodily injuryand properly damage liability
insurance with commord single limits of not less than$ 1,000.(100 per occurrence (Thispolicy
shall include abroad forth comprehensive genual endorsement)
(ii) LIQUOR LIABILITY insurance of not less thnn$2,000,00o per
occurrence, (Contingent liquor liability is occurred of SMG and liquor legal liability shad l be
required by SMG of my concessionaire, vendor, licensee or other host engaged in such activity
to which this coverage is applicable)
(li) UMBRELLA or EXCESS I_ IAB I L IY insurance of not less than
55,000,0110 per occurrence and aggregate -
div) COMMERCIA L AUTOMOBILE LIABILITY insurance, endorsed for
mv mor," with centered single limits ofHatt lity of not less than $1ft0WukfI per occm once.
(v) PROFESSIONAL LIABILITY insurance l Errors and emissions)
including empl0yment practices, with a limit of liability of not less than $I 000.000 per claim
(vi) CRIME COVERAGE covering the activities of all of SMG's employees
from employee dishonesty, forgery, theft, rubbery and safe burglary in an amount not less then
$11000,000_
(vii) WORXERSCOMPENSARON and EMPLOYER'S LIABILITY
insurance as required under the California tabor Code.
The above described policies of Insurance shall be endorsed to provide an unrestricted
30 day nminon notice in favor of Owner of policy cancellation of coverage except for the Workers'
Compensation policywhieh shall provide a 10 day written notice of such cancellation of coverage, he
We event airy policies are due to expire during the Operating Term or any extension period of this
Agreement. SMG shall provide a new ecuificate evidencing renewal of such policy on or priori the
expiration date of the expiring policy(ea). Upon issuance by the insurer, broker, or agent of a notice
of cancellation in coverage, SMG shall file with Owner anew certificate for such policMies).
(b) The Cotutuceial Gencral Liability policy, Automobile Liability insurance
policv, Liquor Liability policy, and Umbrella or Excess Giant try policy shall be written on on
C-1
occurrence farm and shall time Owner, its officers, officials, agents, employees and volunteers as an
additional insured. I'he. Workers' Compensation policy shall contain a waiver of all rights of
subrogationagaiisstOwner. Such pohcypes) ofinsurance shall be endorsed so SMG's insurance shall
be primary and no contribution shall he required of Owner.
In) In the event claims made gross are used for any Professional Liability coverage
either (l) the policy(ies) shall be endorsed to provide not less than a }year discovery pcnod; or (ii) the
cover age shall be maintained for a minimum ofd years following the nomination or expiration of this
Agreement.
oh SMG shall have lumished Owner with the certificamts) and applicable
endorsements for all required insurance prior to Owncr's execution of this Agreement 9MGxhall
fumish Owner with copies of the actual policies upon the request of Owner's Risk Manager at any
Lime during die life of the Agreement or any extension.
(el SMG wi l l be responsible for payment of any and all deductibles contained in
any insurance policies provided hereunder for Crime Coverage and Professional Liability, and SMG
wil l also be responsible for payment of any and all self-insured retentions regarding same; and such
deductibles and retentions will be at SMG's sole cost and expense and will not be paid from funds in
the Approved Budget. If there are changes in the insurance market after he execution and delivery of
this Agreement that cause adverse modifications to the structure of deductibles and/or self-insured
retentions applicable to SMG .5 Tomoce policies existing an of the date of such execution and
delivery, the paries shall meet to discuss such modifications and to mutually agreed upon reasonable
changes to the provisions of this smbpmagmph (c).
In Ratme time during the life of the Agreement SMG fails to maintain the
required insurance or full farce and effect. all work under this Agreement shall be di scoumaled
nmedi ately, and all paynrnns due or that become due to SMG shall be withheld until notice is
received by Owner that the required insurance has been restored to full Pores and effect and that the
premiums therefore have been paid for a period satisLi to Owner Any W lure to maintain the
required insurance shall be sufficient cause for Owner to terminate this Agreement
Ig) If SMG should subcontract all or any portion of the services to be performed
order bis Agreement SMG shall require each subcontractor to provide maintains protection in favor
of owner. its officers, officials, employees, agents and volunteers in accordance with the terns of this
Exhibit C, except hat the,cubcnnnairmos' certificates and endorsements steal I be on file with SMG and
Owner prior to die eonwenevnem of my work by die subcontractor.
ILL The Crime Coverage and Professional Liability insurance will be provided by
SMG at i6 sole cost and expense and will not be paid from funds in are Approved Budget.
C-2
November 4,
2008 "NO RETURN"
Cnmkll Adep[ba 11/4/08
Mayor Approval.
TO:
MAYOR ALAN AUTRY
Mayor Veto:
Oveinde Request
FROM:
REBECCA E. KLISCH, CMC
Clty Clerk
SUBJECT:
TRANSMITTAL OF COUNCIL ACTION FOR
APPROVAL OR VETO
At the Council meeting of 1114/08, Council took legislative action entitled Awd contract to
SMG for the operation/ marketing of the Fresno Convention and Entertainment Center.
Item No. 9:00 A.M. Y1, by the following vote:
Ayes : Calhoun, Caprioglio, Dages, Duncan, Sterling, Xiong
Noes None
Absent Pence
Abstain None
Please indicate either your formal approval or veto by completing the following sections and
executing and dating your action. Please file the completed memo with the Clerk's office on
or before November 14, 2088. In computing Hie ten day period required by r Charter, the first
been day has n excluded and the tenth day has been included unless the 18 ° day is
Saturday, Sunday, or holiday. in which case it has also been excluded. Failure to file this
memo whh the Clerk's office within the required time limit shall constitute approval of the
ordinance, resell or action, and it shall take effect without the Mayor's signed approval.
Thank you
APPROVED:
VETOED for the following reasons_ (Written objections are required by Charter: attach
additional sheets if necessary .I
Alan Autry, Mayor
COUNCIL OVERRIDE ACTION:
Ayes
Noes
Absent
Abstain
Andrew T. Souza
City Manager
City of Fresno
2600 Fresno Street
Fresno, CA 93721
September 15, 2008
Dear Mr Souza,
Thank you for meeting with me on January 7, 2008 at Fresno CM Hell. This letter is a follow up
to that meeting
The purpose of that meeting was to discuss two key toplcsl
1) The option to purchase Parcel B as per the ground lease.
2) The possible purchase of the Robert Schottler Conference Center listed as Pamel A on the
lease agreement
The owners of the Robinson Hotel, Unwell Corporationare interested In continuing the
dialogue conceming these purchases. As such, I would like to discuss this further venh you. I
look forward to hearing from you soon.
Sincerely
Steve Klein
General Manager
coffin
R,,, an Howl a Conference carter
z2?3V>m-aStirrer . rMO cn 93n 1 Jys`ry
r raneorcom268 Wo•Eix (359) 4r Hsa /`\a, (,%
.......nes:eonrom I/
�rzesno county gccalno
office of education AFP
CrYU
=L Nardi
nni.neam
September te, 21IDe
Andy Serra
City Manager, Presto
2500 Proton Street
Fresno, California 93721
Dear Ana,
The Fresno County Offices of Education has been a long-term Iden of the Fresno Convention and
Entertainment Center we have had the opportunity to showcase several outstanding events which
featured student performances in the various venues.
We are very pleased with the management of the facilities, the working relationships that we have
developed, and the overall performance of SMG over the past J years They have been a good partner
In helping to bring these events to Fresno and In their commitment to our commuting
The word on the street from rho educational community is very simple, if you want a well-run topno¢h
vent, bring It to Fresno. I have personally shared this Information with my colleagues up and down the
state
I ask you to supporta renewal of the management agleemem with SMG. They have become
Indispensable community. partners.
If you have any questions, I would be happy to respond.
Sincerely,�
Larry L. Powell
I I I I %m, Nur,. Poems, • Frmnn Fahnor l'a 91721-2KKI
(5Scj) MS 31111) • Tint I?F9i30" so 12 • lVehS'he_ wwwfcoo-kI2.cILL' • LA X, uS91-0f1-AD
Sun -Maid Growers of California
City Manager Andrew Souza
City of Fresno
2600 Fresno Street
Fresno, CA 93721
Dear City Manager Souza:
We are writing this letter for your consideration in evaluating the possible renewal of the
SMG Management Agreement between the City of Fresno and Fresno Convention and
Entertainment Center.
Sun -Maid Growers of California representing 1000 raisin growers and employing 700
employees in the Fresno area has held its Annual Meeting and Grower Luncheon at the
Saroyan Theatre and Valdez Hall for the past 30 years.
During the past four years we have developed a positive working relationship with the
Fresno Convention 8 Entertainment Center (SMG) staff and its General Manager,
William C Overman Their responsiveness and overall performance has enabled us to
have successful events at your facilities.
Sincerely,
( ,-4�4
Barry F. Kriebel
President
BFK gm
I.
n -_.Twin k A
lnpn 4f A l s ]LsG
19➢232
In
wxcro - jr)
l__I n
October 16, 2008
City Manager Andrew Souza
City of Fresno
2600 Fresno Street
Fresno, CA 93721
Dear City Manager Souza:
We are writing this letter for your consideration in evaluating the possible renewal of the
SMG Management Agreement between the City of Fresno and Fresno Convention and
Entertainment Center.
Sun -Maid Growers of California representing 1000 raisin growers and employing 700
employees in the Fresno area has held its Annual Meeting and Grower Luncheon at the
Saroyan Theatre and Valdez Hall for the past 30 years.
During the past four years we have developed a positive working relationship with the
Fresno Convention 8 Entertainment Center (SMG) staff and its General Manager,
William C Overman Their responsiveness and overall performance has enabled us to
have successful events at your facilities.
Sincerely,
( ,-4�4
Barry F. Kriebel
President
BFK gm
rlW.M
CiIY O VVISI-R)RV VR
CONVEN7lON S
BUREAU
ew" I e.nr„her_
-0�nm5rxmi:.
Mr. Andy Souza
City Manager
I'he City of Fresno
2600 Fresno Street, 2"s Floor
Fresno. CA 93721
Dear Me Bowie
This letter is in reference to the relationship the Board and staff of the Fresno Convention
and Visitors Bureau (CVB) have with Bill OverRlt and SMG.
During the land year Bill Overlelt, General Manager of SMG, has provided much needed
support and oversight to the CVB. His guidance noting the transition between Chief
Executive Officers was critical in helping this organization to become a more fiscally
sound and well rod non-pmGt. Bill stepped up to the plate and took financial
responsibility for the CV B by having all of the finances on through SMG during this
time. He reviewed every im, ame an make sure that the transition ran smoothly. In addition
he never wavered on his insistence that the CVB follow the audit recommendations
contained in the Marshall Murdnugh Report.
Bill has also been pivotal in the mcmase in the new com cations that the CVB has
Gently booked. Through frequent meetings with the CVB CEO and Director of Sales
Bill has adjusted feed im costs when necessary in order to finalize contracts. In addition,
SMG underwrote both the C'VB'a Annual Luncheon as well as their Destination Fresno
County Marketing Symposium,
The B Board and staff have a very positive working relationship with SMG both
a Jiisr'trettvdy'and linancialy,.
Incerely
Brian Glover -
Claitman of the Board
868 M STREET, 3RD FLOOR • FRESNO CALIFORNIA93721 •.559 d45-8900.800 788-0836, FAX 559 C4"K2
IAN In A 00IN VAIIEY
TOWN HALL, INC.
(lubber 1.2008
Andrtw Sousa. City ManaNer
u.. v.
(5q nferecnn
'(00 Fresno aneH
Fresno, CA 93]_'1
,.ro..
"
�..� u"L,
UwrMr.soul
M'.sslass
Oil hdalf of the Barrel of Onectors of the San Joaquin Volley Town hall
lecture series fd like to ask wu to support the rcm.rel of the nnaagemem
^•".• ,..
vu_recmnn aids SM(i.
w dPvw.
mmmum
OurBoardplcutW wlth the 1perat an
of
cions abort
b) the S%y Urfnd
SMG out orvpral far
nit Prailt that
czaim events bt the series
wLea.,
�'� gars hus pruvcnmd a mow ul lectures that M1nns to I4csm rntoxncd speakers
of No II rete" lied speaker
IIke I dain,rs P19ediv o. ,tort Meacham and. this% IasiJet I Greenfield Lach lecture is
v�o.e
followed by .]I Landh.ln Clem 89th the speaker in thu lohhs at the 6aracan._a
w
chat lenging scone l n hsel C but S AIG stall has send us with profescionalken in
a up possible
ven'JvAe%c
r..emw�m
reeeiellalol ol'prmisefor thelecilltles of our lecwmezricv and "c it
Itketo jsc SM(i their slam nfcredit, 'Their leadership and direction hasccnalnly put
Pon Ka.
_ to the rank.adnmional enledainmenL ,send they deGnitel_v win de praise of our
il
coiluiltsno.
si
we hope yuu x911 anew "Barren
u�Be
reyt
wteln
4;s-
Georgy Munch
President
San.loayuin Vnllav Trion Hall. Inc.
A S H I O N fA I R gECEIVFv
rod;:m
September 36. 2008
Mr. Andrew Souza
City Manager
('try of Fresno
3600 Fresno Street
Fresno, ('ahRlmla )3JZ]
Re Sgppotl for Renewed SMO Management AErecment
Dear Andy
We as luny -term clients of the Fresno C'onvunion G Entertainment Center f FCEC) are
clinical w A the management of the leeilitles one worklm relationship and overall
perhurtrmnee of SMG oder the pasty years
The leadership pmulded by SMG hes mused Fresno City s profile in the entertainment
and meeting industryhglh reicnivialiv and nationalh
W c would like you to suppulLa renewal ofthe management agreement vnth SMG Their
contfntad service to our City and local Industry is very imporant.
Sincerely your"
CSM
Senior Manager
MACERICH
nrCE1VCl!
I: &ar Road, #343
Sin Dice CA92120
Tm NiN,613.177r,
MISS CALIFORNIA ORGANIZATION F,. His 074967N
October I, 2008
Andrew Sous
City Manager
City of Fresno
2600 Fresno Street
Fresno, CA 93721
In reSupport for Renewed SMG Management Agreement
Dear Mr. sono,
As clients of the Fresno Convention & Entertainment Center since 1993, we are pleased
with the management of the facilities and the overall performance of SMG. Wee joy an
excellent working relationship with SMG management and staff
We wish to support the renewal ofdbe current managemem agreement with SMG.
Very Truly Yours,
ita_s_c-�.r w. (piece
Robert W. Arrival
President & Chief Executive.ORcer
The Miss California Orgameation
cc: Members of the Fresno City Council
Andrew Soon, City Manager
A Miss America State Organization
N&WSPAU
TERTAINMENT
October 2, 2008
Mr. Anderw Souza
City Manager
City of Fresno
2600 Fresno Street
Fresno, CA 93721
RE: SMG Lease Renewal
Bear Mr. Souza
I am writing to express my support tar he pending SMG contract renewal proposal to the
City of Fresno for management of the Fresno Convention and Entertainment Center.
By way of background we have worked In the Canter for over 20 years presenting shows
as Ban of our Broadway in Fresno series as well as a number of additional concern and
theatricals. Some highlights mciune Mamma Mia. Rlverdance. Beauty and the Beast.
The Producers and, looking forward. dates with W'vked vie hope to have in the market
for the 2010-2011 season.
Our experience with the SMG management team, particularly Bill Overfeh. Lynn
Higginson and Alan Emerian has been uniformly positive. More specifically all three of
these individuals have gone out of their way M help make it possible to present shows
that otherwise would not have played the market. They have done this by helping to
clear dates for large productions such as Mamma Mia and Riverdance by providing
extra marketing support for challenging dates and going out of the way to help us do the
market research necessary for some shows to convince them that Fresno Is a market
..si'O hoc .,.c - T` -...n our otl p' t. ds C'uslncss in fY.snc.
I suspect you are receiving similar comments from other users of the Fresno Convention
and Entertainment Center and stand willing to answer any questions you may have
about our business in the marketplace.
Tharyou.
Steve Bovlay 1
COO Tx Productions. Inc. DBA NewSpace Entertainment
110 Fal wdi Rtnple-$10020-SM IAM Cary,Irt alt@. Pri ear) 35522M- rw IWt1 KS N36 . www. Oawma wrItair ur
IN IlblL ULI1 UrKMA
WO-MENS
CONFERENCE
•, Received
7:19
September 30, 2008 cNO.pne ore..
Andrew Souza
City Manager
City of Fresno
2800 Fresno Street
Fresno, CA 93721
Dear Mr. Souza.
We as long-term clients of the Fresno Convention 8 Entertainment Center (FCEC) are
pleased with the management of the facilities, our working relationship and the overall
performance of SMG over the past years.
The leadership provided by SMG has raised the City's profile in the entertainment and
meeting industry, both regionally and nationally.
We would like you to suppod a renewal of Me management agreement with SMG.
Their Continued service to our City and local industry is very important.
I1/Sii/ncceerrreellyyy,,'
Mary S[�belfeld
Conference Coordinator
Gust Onme Box 3187 • TW IOc3. CA 95381 a1$7
I MRP 86e.-6249-P1,01u a Fav WW.CCWC-lr&Sn*.org
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