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HomeMy WebLinkAboutSa #4CITY OF i LADE LLSINOKE REPORT TO SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: GRANT M. YATES, EXECUTIVE DIRECTOR DATE: SEPTEMBER 24, 2013 SUBJECT: FIRST AMENDMENT (2014) TO STADIUM INTERIM MANAGEMENT AGREEMENT Recommendation Approve and authorize the Executive Director to execute the First Amendment (2104) to the Stadium Interim Management Agreement dated September 24, 2013 between the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore and the Lake Elsinore Storm LP in substantially the form attached and in such final form as approved by the Agency Counsel. Background In 2001 and 2002, the Redevelopment Agency entered into certain agreements involving the operation and maintenance of the Lake Elsinore Diamond Stadium, including a License Agreement, a Stadium Field And Maintenance Agreement, and a Concession License Agreement (collectively, the "Stadium Operations Contracts "). Pursuant to the Stadium Operations Contracts, the Storm licensed and maintained the Stadium for baseball games and other Storm events. An affiliate of the Storm, Golden State Concessions and Catering, Inc. ( "Golden State), operated the concessions at the Stadium. Under the Stadium Operations Contracts, the Agency's management, operation and maintenance costs were significant and the Stadium operated at a loss. In 2005, the Agency commenced negotiations with Diamond Stadium Group (DSG) to undertake all of the Stadium operations, maintenance and management responsibilities. Storm LP, Golden State and DSG share common controlling ownership. Negotiations between the Agency and DSG resulted in June 2007 AGENDA ITEM NO. SA4 Page 1 of I 1 First Amendment (2014) to Interim Stadium Management Agreement September 24, 2013 Page 2 amendments to the Stadium Operations Contracts and a new Stadium License, Lease and Management Agreement (the "2007 Management Agreement "). DSG fulfilled all aspects of the 2007 Management Agreement which reduced the Agency's Stadium - related costs. However, DSG reported annual losses under the 2007 Management Agreement and in June 2011 chose to exercise its right to terminate the 2007 Management Agreement effective December 31, 2012. Upon termination of the 2007 Management Agreement, the rights and responsibilities for Stadium management, operations and maintenance were again divided in accordance with the Stadium Operations Contracts; however, at that time, the Successor Agency did not have the resources to satisfactorily perform its obligations. On December 11, 2012, the Successor Agency approved the Stadium Interim Management Agreement ( "Interim Agreement ") to provide for the efficient and cost effective management, maintenance and operation of the Stadium by the Storm through 2013. The Interim Agreement is set to expire on December 31, 2013 at which time the burden of maintaining, managing and operating Diamond Stadium under the Stadium Operations Contracts would fall onto the Successor Agency. Discussion Pursuant to the Dissolution Act and provisions of AB 1484, the Successor Agency has prepared a Recognized Obligation Payment Schedule for the period from January 1, 2014 through June 30, 2014 (the "ROPS 13 -1413") which lists, among other things, as enforceable obligations of the Successor Agency, the obligations related to the (i) Concession Agreement; (ii) License Agreement; (iii) Maintenance Agreement; (iv) Stadium operations and maintenance obligations, and (v) the Interim Agreement. Consistent with the legislative authorization contained in AB1484 allowing successor agencies to enter into enforceable obligations for the purpose of maintaining the assets of the former Redevelopment Agency, a First Amendment to the Interim Agreement has been prepared to provide for the continued, efficient and cost effective management, maintenance and operation of the Stadium through 2014. Successor Agency staff believes that approval of the attached First Amendment (2014) to the Stadium Interim Management Agreement will ensure that the "Lake Elsinore Storm" can continue to play its home baseball games at the Stadium consistent with the Stadium Operations Contracts and that the Stadium will be maintained and managed in a first class condition on a continual basis throughout the 2014 calendar year. The Storm continues to possess the experience, capabilities and qualifications to best carry out these obligations. Page 2 of 1 I First Amendment (2014) to Interim Stadium Management Agreement September 24, 2013 Page 3 Stadium Operations Contracts - Pursuant to the Stadium Operations Contracts, the Storm and /or the Successor Agency are entitled to compensation during the 2014 calendar year as follows: (a) License Fee: Under the License Agreement, the Storm is required to pay to the Successor Agency a License Fee in the amount of $480,037 in addition to a CPI adjustment of $9,089. (b) Percentage of Concessions: Under the Concession Agreement, the Storm's affiliate, Golden West, is required to pay Successor Agency a percentage of the GRCS pursuant to Section 6 thereof (the "GRCS Concession Fee. "). (c) Annual Maintenance Fee: Under the Maintenance Agreement, Successor Agency is required to pay Storm an Annual Maintenance Fee of $224,101 along with a CPI adjustment of $4,243. Interim Management Agreement - During the 2014 term of the First Amendment, compensation to the Storm for the performance of the maintenance, management and operations services shall be as follows: (a) Assignment of GRCS Concession Fee. Successor Agency assigns Successor Agency's right to payment of the GRCS Concession Fee under the Concession Agreement to the Storm during the 2014 term, estimated at $34,000 annually; and (b) Waiver of License Fee. Successor Agency waives Successor Agency's right to payment of the License Fee under the License Agreement during 2014 as an offset against the payments due by the Successor Agency to the Storm; and (c) Payment of Maintenance Fee and CPI Adjustment. Successor Agency shall continue to pay the Annual Maintenance Fee as identified in Section 7.1(d) (i.e., $224,101) and CPI adjustment identified in Section 7.1(e) (i.e., $4,243). (d) Payment of Additional Interim Management Fee. Successor Agency shall pay to Storm $392,190, payable in equal monthly installments ( "Additional Interim Management Fee "). The Maintenance Fee and CPI Adjustment along with the Additional Interim Management Fee will result total cash payment from the Successor Agency to the Storm of $620,534 as consideration for services provided under the Stadium Operations Contracts and the Interim Stadium Management Agreement as amended by the First Amendment, which aggregate amount shall be payable in equal monthly installments of $51,711. Page 3 of 11 First Amendment (2014) to Interim Stadium Management Agreement September 24, 2013 Page 4 The First Amendment also provides for proposed 2014 Capital Repairs of $508,200 as the Successor Agency continues to be responsible for all capital repairs and alternations consistent with the Stadium Operations Contracts. A significant capital repair ($350,000) is replacement of the 20 -year old field lighting system necessitated to meet league standards for illumination. This proposed replacement follows a report issued as part of the Major League Baseball's inspection of Diamond Stadium last year where it was determined that the Diamond Stadium lighting did not comply with the illumination standards for a Class A baseball facility. The First Amendment is subject to the approval of the Oversight Board and DOF. The Oversight Board is scheduled to consider the First Amendment and the ROPS 13 -14B at its regular meeting of September 24, 2013. Following approval by the Successor Agency and the Oversight Board, the First Amendment and the ROPS 13 -14B will be submitted to the Department of Finance (DOF). Fiscal Impact The ROPS 13 -14B to be considered by the Successor Agency, Oversight Board and the DOF provides for an allocation of Real Property Tax Trust Funds to cover the Successor Agency obligations for the period of January 1, 2014 through June 30, 2014. The ROPS 14 -15A (for the second half of calendar year 2014) will be prepared to similarly reflect these obligations which will be presented to the Successor Agency, Oversight Board and DOF and upon approval will provide funds for the second six months of the term of the First Amendment. Prepared by: Barbara Leibold, City Attorney Approved by: Grant M. Yates, City Manager Attachments: First Amendment (2014) to Stadium Interim Management Agreement Page 4 of 11 FIRST AMENDMENT (2014) TO STADIUM INTERIM MANAGEMENT AGREEMENT THIS FIRST AMENDMENT (2014) TO STADIUM INTERIM MANAGEMENT AGREEMENT (this "Amendment "), dated for identification as of September 24, 2013, is made by and between the SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE ( "Successor Agency "), and the LAKE ELSINORE STORM LP, a California limited partnership ( "Storm "). RECITALS The following recitals are a substantive part of this Amendment: A. The Successor Agency and the Storm entered into that certain Stadium Interim Management Agreement dated January 1, 2013 (the "Interim Agreement ") to provide for the performance by the Storm of certain maintenance, upkeep, and operations of the Premises (as defined in the Interim Agreement). Capitalized terms used herein which are not otherwise defined herein shall have the meaning ascribed to them in the Interim Agreement. B. The Interim Agreement was successfully implemented during calendar year 2013 to provide for efficient and cost effective management, maintenance and operation of the Premises but, absent this Amendment, will expire on December 31, 2013. C. AB 1484 established a schedule for adoption of a Recognized Obligation Payment Schedule for the period from January 1, 2014 through June 30, 2014 (herein referred to as the "ROPS 13 -1413") and for all subsequent Recognized Obligation Payment Schedules. AB 1484 also expanded the review period and authority of the Department of Finance ( "DOE ") to review and approve Recognized Obligation Payment Schedules and to make its determination "of the enforceable obligations and the amounts of funding sources of the enforceable obligations" listed thereon, including the authority to eliminate or modify any item on the Recognized Obligation Payment Schedules prior to its approval. D. By adoption of its Resolution No. OB 2013 -_ on September 24, 2013, the Oversight Board of the Redevelopment Agency of the City of Lake Elsinore approved the ROPS 13 -14B pursuant to Section 34180 of the California Health and Safety Code. E. On September 24, 2013, the Successor Agency adopted the ROPS 13 -14B which listed, among other things, as enforceable obligation of the Successor Agency, the following obligations related to the Premises as more fully described and referenced therein: (i) Concession License Agreement, as amended ( "Concession Agreement'); (ii) License Agreement, as amended ( "License Agreement'); (iii) Stadium Field and Maintenance Agreement, as amended ( "Maintenance Agreement'); First Amendment to Stadium Interim Management Agt 091913 - I - Page 5 of 11 (iv) Stadium operations and maintenance obligations; and (v) The Stadium Interim Management Agreement. F. Following approval of the ROPS 13 -14B by the Oversight Board and the Successor Agency, the ROPS 13 -14B will be transmitted to the DOE and it is anticipated will be approved as to the above - referenced enforceable obligations related to the Premises. G. Consistent with the legislative authorization contained in AB1484 allowing successor agencies to enter into enforceable obligations for the propose of maintaining the assets of the former Redevelopment Agency, the Successor Agency seeks to provide for the continued efficient and cost effective management, maintenance and operation of the Premises for calendar year 2014 and to retain the Storm which possesses the experience and qualifications to carry out such continuing obligations on an interim basis so as to ensure that the "Lake Elsinore Storm," a single "A" baseball team which is a member of the California League of the National Association of Professional Baseball and owned by Storm LP, continue to play its home baseball games at the Stadium. H. In furtherance of the purpose and intentions of the parties as with respect to the Interim Agreement, the parties hereto agree to amend the Interim Agreement as provided herein. AGREEMENT NOW THEREFORE, in consideration of the foregoing Recitals and the terms contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows: I . Term of Agreement; Termination. Section 6 of the Interim Agreement, entitled "Term of Agreement; Termination," is hereby deleted in its entirety and replaced with the following: 6. Term of Agreement; Termination 6.1. Term. The term of the Interim Agreement (hereinafter the "Term ") shall commence on the Effective Date and shall, unless earlier terminated in accordance with Sections 6.2, 19, or 20 hereof, automatically terminate on December 31, 2014. 6.2. Rights of Termination Prior to Commencement and Expiration of the Term (a) January 1, 2014 Termination. Successor Agency may terminate this Interim Agreement prior to January 1, 2014 (the "Commencement Date "), by giving written notice thereof to the Storm no later than November 30, 2014. (b) June 30, 2014 Termination. Successor Agency may terminate this Interim Agreement effective as of June 30, 2014, by giving written notice thereof to the Storm no later than May 30, 2014. First Amendment to Stadium Interim Management Agt 091913 - 2 - Page 6 of 11 (e) Default. The Successor Agency and Storm shall have the right to terminate this Interim Agreement as a result of an uncured Default hereunder. Any such termination shall be made in accordance with Sections 19 or 20. (d) Party's Property and Offset. Upon termination of this Interim Agreement under this Section 6.2, all materials and equipment purchased by either party hereunder in connection with this Interim Agreement shall remain that party's property. In addition, the Storm shall be entitled to an offset for all of the Storm =s services rendered hereunder through the effective date of any such termination. (e) Effect of Termination. Notwithstanding the termination of this Interim Agreement pursuant to this Section 6.2, the provisions of Stadium Operations Contracts shall remain in full force and effect. 2. Compensation. Section 7 of the Interim Agreement, entitled "Compensation," is hereby deleted in its entirety and replaced with the following: 7. Compensation 7.1. Stadium Operations Contracts Compensation Recap. Pursuant to the Stadium Operations Contracts, the Storm and /or the Successor Agency are entitled to compensation during the Term as follows: (a) 2014 License Fee: Under the License Agreement, the Storm is required to pay to the Successor Agency a License Fee in the amount of $480,037 for 2014. (b) CPI Adjustment to 2013 License Fee: Under the License Agreement, the Storm is required to pay to the Successor Agency a License Fee adjusted for the CPI. Accordingly, the Storm is required to pay the Successor Agency the CPI adjustment to the License Fee for 2013 in the amount of $9,089. (e) Percentage of Concessions: Under the Concession Agreement, the Storm's affiliate, Golden State, is required to pay Successor Agency a percentage of the GRCS pursuant to Section 6 thereof (the "GRCS Concession Fee. "). (d) Annual Maintenance Fee: Under the Maintenance Agreement, Successor Agency is required to pay Storm an Annual Maintenance Fee of $2241101 for 2014. (e) CPI Adjustment to 2013 Maintenance Fee: Under the License Agreement, the Successor Agency is required to pay to the Storm a Maintenance Fee adjusted for the CPI. Accordingly, the Successor Agency is required to pay the Stone the CPI adjustment to the Maintenance Fee for 2013 in the amount of $4,243. 7.2. Storm Compensation January 1, 2014 — December 31, 2014. Commencing upon the Commencement Date (January 1, 2014) and continuing through the expiration of the Term (December 31, 2014) and as consideration for the performance of the services set forth herein, the Storm shall be compensated as follows: First Amendment to Stadium Interim Management Agl 091913 - 3 - Page 7 of I 1 (a) Assignment of GRCS Concession Fee. Successor Agency hereby assigns Successor Agency's right to payment of the GRCS Concession Fee under the Concession Agreement to the Storm during the Term, estimated at $34,000 annually; and (b) Waiver of License Fee. Successor Agency hereby waives Successor Agency's right to payment of the License Fee under the License Agreement during the Term as an offset against the payments due by the Successor Agency to the Storm hereunder; and (c) Payment of Maintenance Fee and CPI Adjustment. Successor Agency shall continue to pay the Annual Maintenance Fee as identified in Section 7.1(d) (i.e., $224,101) and CPI adjustment identified in Section 7.1(e) (i.e., $4,243). (d) Payment of Additional Interim Management Fee. Successor Agency shall pay to Storm $392,190, payable in equal monthly installments ( "Additional Interim Management Fee "). The Maintenance Fee and CPI Adjustment along with the Additional Interim Management Fee will result total cash payment from the Successor Agency to the Storm of $620,534 as consideration for services provided under the Stadium Operations Contracts and this Interim Agreement, which aggregate amount shall be payable in equal monthly installments of $51,711. The Storm acknowledges and agrees that in no event will the Agency be required to provide the Storm with any other form of payment for performance of the services as provided in this Interim Agreement. The parties acknowledge that the historic operating costs of the Stadium equal or exceed the compensation due to Storm hereunder and that it is in each of the party's best interests to enter into this Agreement for the efficient use and operation of the Stadium. 3. Capital Repairs. Section 8 of the Interim Agreement, entitled "Capital Repairs," is hereby deleted in its entirety and replaced with the following: 8. Capital Repairs. Capital Repairs shall be governed by the applicable provisions of the Stadium Operations Contracts. The necessary Capital Repairs for calendar year 2014 are set forth in Exhibit "C" attached hereto and incorporated by reference herein. The Storm shall undertake and complete such Capital Repairs as set forth in Exhibit "C" and such other necessary Capital Repairs only as authorized and directed by the Successor Agency's Executive Director or his designee. The Storm shall comply with such policies and procedures as required by the Successor Agency's Executive Director or his designee for reimbursement by the Successor Agency of the costs incurred by the Storm for completion of authorized Capital Repairs. 4. Accuracy of Recitals. The Parties acknowledge the accuracy of the foregoing Recitals, which are incorporated herein by this reference. First Amendment to Stadium Interim Management Agl 091913 - 4 - Page 8 of l l 5. Authority; Priority of Amendment. This Amendment is executed by the Parties' authorized representatives. Except as expressly modified herein, all of the terns of the Interim Agreement shall remain unchanged and in full force and effect, and the Parties shall continue to fulfill their respective obligations under the Interim Agreement as amended by this Amendment. To the extent of any conflict between the terms of the Interim Agreement and the terms of this Amendment, the terms of this Amendment shall control. 8. Captions. The captions appearing in this Amendment are for convenience only and are not a part of this Amendment and do not in any way limit, amplify, define, construe, or describe the scope or intent of the terms or provisions of this Amendment. 9. Counterparts. This Amendment may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute but one and the same document. 10. Commencement Date. Unless earlier terminated in accordance with Section 6.2(a), the provisions of this Amendment shall commence on January 1, 2014 (the "Commencement Date "). First Amendment to Stadium Interim Management Agt 091913 - 5 - Page 9 of 1 I IN WITNESS WHEREOF, the parties have executed this Amendment on the respective dates set forth below. ATTEST: SUCCESSOR AGENCY SECRETARY By: Virginia Bloom APPROVED AS TO FORM: LEIBOLD McCLENDON & MANN, P.C. Successor Agency Counsel By: Barbara Zeid Leibold "SUCCESSOR AGENCY" SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE By: Grant Yates, Executive Director "STORM" LAKE ELSINORE STORM LP, a California limited partnership By: GJJ STORM MANAGEMENT, LLC, a California limited liability company Its: General Partner Dated: By: First Amendment to Stadium Interim Management Agl 091913 - 6 - Gary E. Jacobs, Manager Page 10 of 1 I EXHIBIT "C" CAPITAL REPAIRS FOR CALENDAR YEAR 2014 EXHIBIT "C" Page 1 of 1 Page 11 of I 1 Cost Replacement lighting system to comply with MLB standards. $ 350,000.00 Paint all exterior portions of the stadium $ 55,000.00 AED in first aid room $ 37000.00 Plywood for outfield wall $ 12,000.00 Seating bowl railings (replace and paint) $ 16,000.00 Ceiling tiles in concession stands $ 101000.00 Replace backflow devices in Concessions $ 81200.00 Replace stolen windscreen $ 3,000.00 Replace doors in dugout tunnels $ 81000.00 Epoxy non -slip floors in umpires room, visiting locker room $ 72000.00 Electric carts for cleaning crew $ 15,000.00 Tables and chairs on terrace $ 15,000.00 Re- tension netting behind homeplate $ 31000.00 Replace Grease trap for concession stand #3 $ 31000.00 2014 Capital Repair Total $ 508,200.00 EXHIBIT "C" Page 1 of 1 Page 11 of I 1