Recommendation to authorize City Manager, or designee, to execute any and all documents necessary to enter into an agreement with ASM Global, of Conshohocken, PA, for management of the Long Beach Convention and Entertainment Center, located at 300 East Ocean Boulevard. (District 1)
Thank you. We're going to go ahead and go right into item 23, please. Report from Economic Development. Recommendation to execute an agreement with ASEM Global for Management of the Long Beach Convention and Entertainment Center, District one. Thank you. And before we begin, Councilwoman Allen, I. Yes, I have to recuse myself with this item. I live within 500 feet of the convention center. Thank you. There is a motion in a second, but I want to start off, of course, by doing the staff report. Thank you, Mr. Mayor. We do have a staff report. This is a very significant item. The council has been really involved in this through some closed session negotiations, and we're really happy to be here for an open presentation on a lease amendment. We have been for the past several months looking to really reposition our convention center, our arena, our theater, and really, you know, take even more steps beyond the amazing facility that it is today, modernizing the agreement and achieving some key goals. So we're really happy to be here. It's been a very good negotiation and I think it's been beneficial for both parties. And we're looking for a long term, ten year agreement for your approval tonight. So I will turn it over to Gianni Vallejo, our acting director of economic development, to walk us through the details. Thank you. Good evening. Honorable Mayor and council members. Simon is intended to provide details. As Tom noted, I've negotiated terms for the management of the Long Beach Convention and Entertainment Center. Start off with a little background. The original agreement from 1991 was a spectacle management group, which subsequently became SMG. In 2019, AG Facilities and SMG merged to become ASEM Global, the largest convention and entertainment venue management company in the world. The current agreement is set to expire September of next year, and while the original agreement has served the center well, it's provided for expansion, improvement and flexibility. Many of the existing terms and fee structure are outdated. The agreement lacks incentive for key priorities and lacks performance measures more consistent with modern center management agreements. In June of 2021, Edison Global submitted an unsolicited proposal to, among other things, extend the term of the existing agreement with direction from council staff of engage with Anthem RSM Global to update and modernize the agreement. First, we negotiated with ASM Global for a relatively short term, a seven year extension through 2029 with a three year option to extend. This gets us through the Olympic Games but does not overextend and provides the city the opportunity to reevaluate the agreement at that time. These revised terms would commence on October 1st, 2022, to accommodate the fiscal year. The base management fee will be set at $500,000 annually with CPI increases. This is an almost $1.5 million reduction in the current base fee. A committee consisting of City, ASEM, Global and CVB representatives will convene annually to develop an annual operating plan to assist in establishing benchmarks, capital improvement priorities and key performance indicators. RSM Global will provide $7 million immediately in direct funding to Citi for urgent capital improvement items and another 3 million if a three year option is exercised. ESM Global will incorporate the use of a mobile based survey tool to measure visitor and user experiences across all venues and event spaces. Annually and prior to each fiscal year, the committee will meet to assess and recommend weightings for financial and performance based benchmarks for a fixed pool incentive program. The purpose here is to incentivize the city's financial, operational and booking priorities. A special revenue incentive provision would provide financial incentive for new and special revenue generation. This would only be paid after city receives 100% of established financial benchmarks. This incentive is only available for new revenue and goes away if and when revenue is established as an ongoing revenue source. This may include development of new food and beverage or special events outlets. It's m global will continue its commitment to labor relations through labor, peace and collective bargaining agreements. And the city will be afforded the opportunity to review and provide input on key facilities. Staffing changes. In addition to already established to the already established City Free Youth Program supporting large citywide events, ASM Global will now provide a Community Free Youth Program providing up to 100 hours of free youth for small community based meetings and gatherings. ASEM Global will establish a $350,000 annual marketing fund to increase by 5% annually, which will include diversity, specific outreach and marketing efforts. And finally, the city retains the option to develop the elephant lot during the term of the amended agreement, and ASEM Global is committed to working with the city to accommodate preparations for the upcoming Olympic Games . Here we have a brief summary of the proposed benchmarks, KPIs that would be tracked and measure to ensure city priorities are structural lies and that performance standards are set for ASM Global. There are also these are also the goals ASEM Global would need to meet to access the fixed pool incentive. Broadly, these categories would include operational and financial performance, community benefit and venue activation goals, and they would include priorities such as revenue in revenue achievement, visitor satisfaction, energy efficiency, diversity, equity, inclusion, and venue booking goals, among others. One area of distinct interest from council was looking at the possibility of utilizing venues for more commercial and entertainment uses . In particular, the Arena Pacific Ballroom has been majority utilized to support conventions and trade shows. The city here would provide a booking plan for ASM Global to work towards as part of its fixed pool incentive as the venue requires updating to Bette to better accommodate entertainment functions. These goals would be developed pre and post capital investment. The proposed initial arena booking goals would be in years. One through four city would set a goal of 30% or more for commercial and entertainment bookings for years five through ten after improvements are made, such as updated seating and concessions at the arena. That booking goal would increase to 50% or more for commercial and entertainment bookings. It's some global has continued to work on programs to benefit the center even during the prolonged COVID closure. Some of the new special revenue programs at the center include participation in the ASEM Global Sponsorship Network, estimated to result in $200,000 in new revenue annually . And a new Ticketmaster exclusive agreement estimated to result in $400,000 in new revenue annually. Even during COVID as and Global has continued to develop revenue opportunities for the center. And despite the uncertainty of the industry, they are willing to make substantial investment to continue as our partner at the Long Beach Convention Entertainment Center. And lastly. Just a brief reminder that the center has substantial facility investment needs and there is a potential to utilize ASM Global's capital investment payment, along with any stronger net position resulting from this agreement to fund a broader capital investment effort. Any consideration of financing or debt service would be evaluated with the Council at a later date. So we believe these terms represent an updated agreement that provides for increased revenue to the city, more accountability for the operator, and incorporation of city council priorities. Thank you. And this concludes my staff report. Thank you very much. Let's go ahead and do public comment first and then we will go back to the council. And then we have four members that have signed up. And Madam, quickly want to read those four names and then we'll go from there. Can the following people please line up? Bob McClintock said Ramani. Nikki Claire and Todd Lummis. Right. You have 3 minutes. Mr. Mayor. Members of the council, I want to thank you very much. My name is Bob McLintock and executive vice president of Convention Service, Race and Global. And I'm here on behalf of the entire company. And Ron Benson, our president. I'm here to actually direct three. Thank you. First, I want to thank this body here. We are so fortunate in Long Beach to have an engaged council and mayor and what we do and the thousands of people who make their living in the hospitality industry. Thank you for that. Because without that, we could not have the lives that we have. The second group of people I want to take a moment to thank are the men and women who work at the Convention Center itself. Their work over the past two years has been unbelievable. The challenges they face, the way they've stepped up. And and I know that they are excited to be able to continue to serve the customers that come to Long Beach. In particular, I want to take a moment to thank Charlie Byrne. Some of you may know Charlie and I go way back to our days in the city. He came here on what I call the Gilligan's Island tour. I asked him to come here for six months to help me. That was 11 years ago. He has agreed to take a promotion with us to move to Fort Lauderdale. He's going to take on two very important jobs there. One, of course, is being the regional vice regional general manager of the convention center there and in Fort Lauderdale. And the second is to be closer to his impending grandchild. The last person I want to thank and I have to do this is Steve Goodling. I'm very fortunate and blessed in my career to be able to travel the world and work with convention centers and destinations all around the world. Nowhere do I see a partnership with our destination marketing organization and the vision and commitment that Steve has brought to this and his willingness to work with us to create that unique product that is Long Beach is really, I think, what makes this community so special. So thank you all and thank you for your time. Good evening, Mr. Mayor and council members. My name is Sid Romani and I'm the area general manager for Hyatt Hotels overseeing the Hyatt centric and the Hyatt Regency. Thank you for supporting the Convention Center. It is such a big part of our local community and the center of our hospitality hospitality community. As you know, the Hyatt Regency is connected to the convention center. In my 24 years of working with Hyatt. I have never seen a strong and effective relationship between the Convention Center and CVB, as I have here in Long Beach. I think through the site inspections around Bryan Brothers, the ACP site, and to see all the stakeholders and the community come together to try and attract this business to Long Beach is truly phenomenal. Their hard work and collaboration bring thousands of guests to our hotels every year. Thank you for keeping our award winning teams at the Center and CVB together for succeeding Long Beach. I also have some friends in the audience that would like to stand up and show their appreciation. So thank you so much for your support. Good afternoon, Mayor Garcia and council members. My name is Nikki. Eloise, Iris Claire. I am the owner of George's Greek Café, along with my family. We have been in the Long Beach community for over 42 years and have been in business in Long Beach for over 22 years. First, I want to thank you for your support for the team at the Long Beach Convention and Entertainment Center. These events are a huge part of our business and I know we've always realized it, but didn't realize how much until this pandemic hit us and saw how significantly this affected our business. Actually, since the pandemic, these past couple of months are the first that we've had, two that are in the positive. So thank you to the convention center. It's a big, big part of it. I just want to reinforce how important the center is to our organization, to our businesses, to our local businesses, to our restaurants, to our hotels. The CVB and convention teams have been an integral part of our success, and they have been incredibly supportive of us. And thank you for your continued support as well. Good afternoon, mayor garcia and members of the council. I'm todd limits. I am a founding partner of pacific six enterprises as well as Ocean Center and Breakers Development. But today, I stand before you as the chairman of the Board of the Convention and Visitors Bureau. In that position, I've had a unique front row seat to see how Steve Goodling and the CVB interact in a truly symbiotic relationship with the three legs of the stool that is the convention industry. It's the CVB, the Convention and Entertainment Center, and the the hospitality community in general. I say it's a symbiotic relationship. As. As somebody who's. Who's been around the block a few times, you never see such an unbelievably good relationship with any member of that that triumvirate of entities. No one ever says no. We all work together. No one no one comes at this self-interested. We regularly win conventions from from larger and fancier convention areas San Francisco, Las Vegas, San Diego, Anaheim. And we do it by all coming out together, rallies, the troops, the folks from the Convention and Entertainment Center from SMG Global. All come together. We get we get community members together. We had a gathering recently for the NAACP council members. Mayor Garcia showed up. And it's really just a winning, winning combination. So I say as the as the the chair of the CVB and as a community member and a very eminent member of the of the hospitality and hotel industry, we couldn't be more grateful and more supportive of of keeping the band together and keeping this wonderful relationship continuing. Thank you all very much. That concludes public comment. Thank you. That concludes our our comment. We will come back to the council. Let me just go ahead and go to the council. Then I'll close and say some comments. Compliments in the house. Thank you, Mayor. I am so excited and so pleased with this agreement, with this contract with an ASEM Global. I think it's just been amazing all the work that you do, all the highlight that you bring to our city, you just shine a light on Long Beach so beautifully and you bring so many wonderful people to experience Long Beach. And that's something that we are so appreciative to, to you for. And it it works. It trickles down. And so, you know, I know I hear a lot of my small businesses in the community really, really embrace it when when they know that there's conventions in town because they are able to benefit from that. So thank you. Thank you for doing all the amazing work that you do all all of your workers. From the top to the bottom, from the bottom to the top. Everybody feels so special being part of this wonderful family. And so I'm just really excited to have you in my district, in District one, and really look forward to a really great relationship moving forward even better than we already have if you if that can even happen. But I'm really, really excited to do this and to be in this in this space with you guys. And again, thank you. Thank you. Thank you for bringing so many, so many people here to Long Beach. And really, you are one of our most valuable economic engines in the city and that we can't thank you enough for the wonderful way that you represent the city and the wonderful way that you treat people when once they get here. And I think that that's very, very important. Your your customer service is outstanding. And I'm just so, so very proud of you and so very proud to have you in our city. We are very lucky to have you. Thank you, Vice Mayor Richardson. Sure. I just want to chime in and, you know, thank our convention center, our CVB, RSM, really for being there for us. Over these past few years, it's been difficult time. Our downtown, our convention center, our tourism district was impacted by the pandemic. But you showed leadership despite that. Helping organize convention centers across the state to establish rules for reopening. When we saw a crisis on our border. You all stepped up and provided shelter to migrant children. And now, as we're charting our recovery and you're now presenting an agreement that you've come to terms with that positions us to explore new opportunities. That puts our city in a better position to slingshot out of this recovery. And so as we think back on this moment in our city and our city's history, you can't you can't think about this moment without acknowledging the incredible work that all of you did to help position our city for strong recovery. So I'm enthusiastic about this agreement. I look forward to the additional economic opportunities this will present of conventions and entertainment in our downtown. So congratulations, and I'm happy to support this motion. Thank you, Councilman Mongo. I was going to take the opportunity to thank each and every one of you for all that you're doing. Many of you who are downtown are still helping out the hotels that are downtown with your overflow and your support. And that's really important that we're a city as a whole working together. And I also want to thank how not just within one specific area, we have hotels and restaurants and the community all coming together. And that means a lot. It means a lot to the residents. And we appreciate you and being so inclusive. Thank you so much. Thank you, Councilman Austin. Thank you. I would like to just join in the chorus in congratulating our ACM and CVB for this agreement. I think this is going to definitely move us forward. This is a little bittersweet. It is sweet in that we are celebrating an agreement. It's a little bitter because we're losing a great asset and Charlie Burn. And so I want to just ask Charlie to stand up, put him on the spot. I know he's here somewhere. He's been an amazing partner for four years here. He's made our convention center a success. And the big part of that is because of the operations there. And I wish him the very best. And as he moves on to his next venture in sunny Florida, very nice. And you all are our best ambassadors to our city for our city here, the face of our city to conventions. I wish you many years of continued success. Thank you. Thank you. Councilman Sorrell. Yeah, it's just. I also want to add my support for the this item as well as renew the contract and just want to thank everyone so much for your hard work as we are entering this phase of important recovery and as we start to make sure people bring their business and activity to Long Beach and that we continue to demonstrate what we have to offer. And I think you do that well, and I hope that we can continue to diversify the kind of opportunities that people can have to do their events here. Thank you. Thank you. I think that's all the comments from the council. I'm just going to say a few comments. First is, I do want to, before we take the vote, just to congratulate everyone that's been involved in this incredible process. It's been actually quite a process, a lot of negotiation, a lot of really great conversation, great proposal. And I want to also just think our team at the city who, you know, oftentimes are the unsung heroes in getting this done. And I think, you know, Mr. Modica, you in the team did a great job of really getting this thing across the finish line. And I just want to thank thank them. I do want to also say, you know, to to just to some global to the whole team there. Of course, Bob, and thank you for being here. And you've been a phenomenal partner already. So this isn't this isn't a risk. This isn't some unknown, you know, new, new era we're going into. But this is a continuation and expansion of something that's already going really, really well. We're just very fortunate to have you all as part of the city team, our convention bureau business, our tourism business, our hotel and restaurant business is an incredibly important part of the success, not just of Long Beach, but the state of California and the entire region. We are blessed to have a great team. You're all here. Many of you were here. Thank you for all your hard work to bring folks to our city and and to allow folks an inside look at what makes a city so great and so special. I also just want to note, you know, these these votes and these decisions to go into these this new contract is actually a very significant deal. This is a huge contract. And it should be because it is essentially picking a partner that is going to be with us as we make investments, bring you folks and really lead tourism into the future. So it's a very big decision and I think we have the absolute right partner for us to do so and do this work in the future. You know, I'm looking forward to the investments into the facility. I'm looking forward to the investments that this contract makes into marketing, into making sure that our hotels are well resourced and have folks coming in to them, that the contract really focuses on bringing incredible events and experiences into Long Beach, into the spaces that we're going to reimagine, many of our spaces that is going to support our already thriving tourism and convention business. I'm particularly excited about the what's in this in this agreement to enhance the Terrace Theater and being able to bring the best shows, the best Broadway musicals, the best theater experience to folks in Long Beach. And a lot of us don't want to drive out to the Pantages every every few weeks that enjoy going to the theater. And so I think that those are things that I'm really looking forward to that I think are all in this agreement. I mean, and make the agreement really strong. We? We pushed really hard to get the best agreement for the people of Palm Beach. And I think this agreement reflects that. And so I just want to thank Bob, you again and your and your team, because I feel very confident that that we're going to be able to enhance an already stellar relationship with with with ASEM Global. And so thank you to all of you, especially to our man Charlie back there, who's been so phenomenal to us. And we've already shared with you that we'll miss you greatly, but we're really excited about the future. So thank you all for being here. We have a motion on the floor which by councilman's and day house invites me. Richardson. And please go ahead and cast your votes. Motion is carried. Great. Well, thank you all very much. We're going to move on now to thank you. I know that will be exiting. Thank you so much to everybody. We do have we're going to transition to our cannabis items now. So not a lot of folks here for that as well. I do have, I believe, three general public comments. Why don't we do those for those three folks and then we'll go right into item 28.