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HomeMy WebLinkAbout1M OCR CITY COUNCIL STAFF REPORT DATE: January 27, 2022 CONSENT CALENDAR SUBJECT: MEMORANDUM OF UNDERSTANDING BETWEEN CITY OF PALM SPRINGS AND THE PALM SPRINGS PLAZA THEATRE FOUNDATION FROM: Justin Clifton, City Manager BY: Jeffrey S. Ballinger, City Attorney RECOMMENDATION: 1. Approve Memorandum of Understanding between City of Palm Springs and The Palm Springs Plaza Theatre Foundation; 2. Authorize the City Manager to execute said MOU. SUMMARY: After a brief pause caused by the COVID-19 pandemic, fundraising for the City of Palm Springs historic Plaza Theatre has started again. These renewed efforts were highlighted recently by the October 2021 pledge of $5,000,000 by television/theatre producer, director and writer, David Lee. This agenda item provides the City Council with the opportunity to review and consider approving a Memorandum of Understanding with The Palm Springs Plaza Theatre Foundation, a non-profit organization, which has been formed to raise funds for the restoration of the Plaza Theatre. BACKGROUND: The City of Palm Springs acquired the historic Plaza Theatre, located at 128 S. Palm Canyon Dr., from the City’s former Redevelopment Agency in 2015. At the time, the California Department of Finance (DoF), which has final authority over the disposition of former Redevelopment Agency properties, approved the conveyance of the Theatre to the City with the understanding that the Theatre has a historic designation and cannot be demolished. The DoF specifically required that the City secure a new operator with conditions that the property will be maintained as a historic structure and performing arts venue. At its April 17, 2019 meeting, the City Council reviewed a report from M. Arthur Gensler & Associates, in which Gensler estimated that it would cost between $10M-12M to re- Item 1M - 1 purpose the Theatre into an entertainment venue for live concerts and other similar purposes. In late 2019, a group of local residents, led by then-Councilmember J.R. Roberts, began a fundraising campaign for the restoration of the historic Plaza Theatre. Specifically, at the 2019 State of the City address, Mr. Roberts announced two donations -- $100,000 from Modernism Week and $50,000 from the Palm Springs Preservation Foundation. And, on February 16, 2020, a well-publicized fundraiser was held at the Theatre, featuring Nancy Sinatra, during Modernism Week. Unfortunately, the COVID-19 pandemic slowed the Plaza Theatre fundraising activities significantly. More recently, however, the fundraising efforts have resumed, including a generous, October 2021 pledge by David Lee in the amount of $5,000,000. Previously, Mr. Roberts and the other volunteer fundraisers were organized as an unincorporated “Steering Committee.” However, since that time, Mr. Roberts has, with the assistance of City Staff and the City Attorney’s Office, established a non-profit organization, “The Palm Springs Plaza Theatre Foundation.” The Foundation is a 501(c)(3) corporation whose corporate purposes include fundraising for the restoration of the Theatre. The Foundation is in the process of establishing its governing board and securing the necessary approvals from the state and federal entities (Franchise Tax Board and Internal Revenue Service) in order for such donations to be tax-deductible. The use of private, non-profit foundations to support the capital and operational needs of cities is common in many jurisdictions, including the City of Palm Springs. For example, the City of Palm Springs is supported by such local non-profits as the Friends of the Palm Springs Animal Shelter, Friends of the Palm Springs Library, and the Palm Springs Public Library Foundation. The use of private, non-profit foundations carries various benefits, including: •The ability to attract private donations from donors who are often more apt to donate to a private, non-profit organization than a governmental agency. •The ability to obtain matching grants and donations, which are not always available for donations to the City itself. •The ability to leverage the time and resources of private residents, rather than devoting City staff time to fundraising efforts. Often, cities that are supported by such non-profit foundations enter into an agreement with the foundation in order to establish the roles and responsibilities of the parties. This is the case with the proposed Memorandum of Understanding (MOU) before the City Council at this time. Specifically, the proposed MOU is intended to help ensure the successful fundraising efforts for the purpose of restoring and ultimately operating the historic Plaza Theatre. The following is a summary of some of the key elements of the proposed MOU. Under the MOU, the Foundation is authorized to use the name, likeness and logo of the Item 1M - 2 City for fundraising purposes. The City will assign a City staff person as a liaison to the Foundation, to serve as the primary point of contact for the Foundation, to coordinate and communicate the plans and needs of the Foundation. Under the MOU, the City will generally be responsible for the on-going maintenance of the Theatre. However, the MOU provides that the Foundation will be able to use the Theatre for various purposes, including holding meetings and occasional fundraising events. The MOU contemplates that the City will enter into separate facility use agreements with the Foundation, as well as other third-party users, for these purposes. Under these facility use agreements, the City will negotiate any different maintenance obligations, depending on the nature of the use, as well as insurance and liability issues. The MOU also provides that the City will publicly recognize the work and contributions of the Foundation. In addition, the City will provide the following financial assistance to help the Foundation with its fundraising activities: • Transfer the current amount held in the City’s Plaza Theatre donation account, in the amount of $165,100. • Provide a start-up contribution to the Foundation, in the amount of $75,000 in the City’s Fiscal Year 2021/22. • Provide future annual contributions, in the amount of $50,000, for the following four (4) fiscal years (Fiscal Years 22/23, 23/24, 24/25, and 25/26). The MOU provides that the Foundation will obtain IRS and FTB approval as a tax-exempt entity and maintain its legal status to solicit charitable donations. The MOU also provides that the Foundation will donate its donations for the design and restoration of the Plaza Theatre. Under the MOU, the Foundation is granted certain “naming rights,” in order to assist in the Foundation’s fundraising efforts. Examples of potential naming rights opportunities include, but are not limited to, the Theatre itself, the lobby, the seats, stage, and the entry patio. City approval is required for naming rights opportunities. For donations up to $100,000, the Foundation must seek and obtain the City Manager’s approval. For donations over $100,000, the Foundation must seek and obtain the City Council’s approval. For all such donations, the City, the Foundation and the individual donor must execute a donation agreement, governing the terms and conditions of the naming rights opportunity. The City, the Foundation, and representatives from Mr. Lee are currently working out the details of a donation agreement which is expected to be brought back to the City Council for consideration in the near future. Under the MOU, City approval is not required for dedication plaques, engraved tiles/brick or donor walls. Finally, although it is expected that the fundraising efforts will be accomplished well before then, the term of the MOU is ten (10) years. Item 1M - 3 ENVIRONMENTAL IMPACT: This MOU is statutorily and categorically exempt from the requirements of the California Environmental Quality Act (Public Resources Code, §§ 21000 et seq.)(“CEQA”) because it merely establishes a funding mechanism for the proposed restoration of the Plaza Theatre, and environmental review required under CEQA will be performed such restoration is more defined. (Kaufman & Broad-South Bay, Inc. v. Morgan Hill Unified School District, (1993) 9 Cal.App.4th 464). FISCAL IMPACT: The MOU proposes an initial transfer of $165,100, another in the amount of $75,000 this fiscal year, and future annual contributions, in the amount of $50,000 for the following four (4) fiscal years (Fiscal Years 22/23, 23/24, 24/25, and 25/26), for a total of $440,100. This “seed money” is expected to yield private fundraising efforts by the Foundation, in order to meet the needs of the Theatre’s restoration, which are estimated to be $10M-$12M or more. REVIEWED BY: City Attorney: Jeffrey S. Ballinger Assistant City Manager: Teresa Gallavan City Manager: Justin Clifton ATTACHMENTS: 1. Memorandum of Understanding. Item 1M - 4 MEMORANDUM OF UNDERSTANDING BETWEEN THE PALM SPRINGS PLAZA THEATRE FOUNDATION AND THE CITY OF PALM SPRINGS This Memorandum of Understanding (“MOU”), by and between the City of Palm Springs (the “City”), and The Palm Springs Plaza Theatre Foundation (the “Foundation”), and together known as the “Parties,” establishes a framework for a sustainable partnership between the Parties in order for mutual support to continue and prosper. This MOU shall be effective on the date (“Effective Date”) that it is signed by both Parties, following any legally required approval by the governing bodies of the Parties. RECITALS WHEREAS, the City is a charter city and California municipal corporation; WHEREAS, the City is the owner of the historic Plaza Theatre, located at 128 South Palm Canyon Drive, Palm Springs California (the “Plaza Theatre”); WHEREAS, the City acquired the Plaza Theatre from the former Palm Springs Community Redevelopment Agency, with the understanding that the City will assume the financial responsibility of the renovations after the acquisition and that the City will secure a new operator with conditions that the Plaza Theatre will be maintained as a historic structure and performing arts venue; WHEREAS, the Foundation was established as a nonprofit public benefit corporation in the State of California on October 21, 2021; WHEREAS, the Foundation was created to raise funds to support the historic restoration, operation and ongoing maintenance of the Plaza Theatre; WHEREAS, the Foundation intends to solicit donations for the Plaza Theatre from individuals, organizations and corporations and recommend to the City that the Plaza Theatre and individual Plaza Theatre amenities be named for specific donors depending on the amount donated; WHEREAS, the Foundation intends to use the donations received, over and above those necessary to restore the Plaza Theatre, to fund an endowment, the income from which will be used to support the Plaza Theatre’s operation and maintenance of the Plaza Theatre; WHEREAS, the Parties desire to enter this memorandum of understanding, to ensure the historic restoration, operation and ongoing maintenance of the Plaza Theatre and define the responsibilities of the Parties to each other in accomplishing this purpose. Item 1M - 5 AGREEMENT Now, therefore, in consideration of the above, both Parties agree to: • Foster a strong and cooperative relationship through regular coordination of the Foundation’s and the City’s plans, budgets, resources, events, and programs and make timely decisions on said matters. • Publicize the community benefits associated with the historic restoration, operation and ongoing maintenance of the Plaza Theatre. • Conduct all financial affairs with transparency. • Document and/or coordinate mutually agreed upon items and share helpful or pertinent information. • Comply with all federal, state, and local laws and regulations. In consideration of the Foundation’s voluntary contributions to the Plaza Theatre (i.e. services and/or donations), and City’s contributions to defray the costs of starting the Foundation and in recognition of the Foundation’s contributions, the Parties agree as follows: I. OBLIGATIONS OF THE CITY a. Governance/Administration i. Grant the Foundation permission to use the name, likeness and logo of the City (and the Theatre, if developed) for uses that support the Plaza Theatre mission, programs, and objectives. ii. Recognize the Foundation as a separate, legal entity. b. Coordination i. Assign a Plaza Theatre Liaison to the Foundation as the primary point of contact to coordinate, communicate, and meet regularly to discuss the plans and needs of the Plaza Theatre and the Foundation. ii. Provide support for mutually agreed upon Foundation programs, budgets, projects, fundraising activities, and/or reports. iii. Provide staff consulting and technical assistance for mutually agreed upon improvement programs and projects whenever possible. iv. Assist Foundation’s coordination with other agencies, as needed. v. Hold a regular meeting, at a minimum annually, between the City Manager and the Foundation to discuss matters mutually agreed upon between the City and the Foundation. c. Finances i. Provide, at least annually, reports on the Foundation’s donations to the City. Item 1M - 6 ii. Provide annual reports on the City’s expenditure of the Foundation’s donations to the Plaza Theatre. iii. Any funds provided to the City under this MOU shall be used solely to fund the historic restoration, operation and ongoing maintenance of the Plaza Theatre. d. Maintenance Standards i. Except as may be set forth in one or more Facility Use Agreements, the City shall be solely responsible for maintaining the Plaza Theatre in good condition, substantial repair, in a safe, clean and sanitary condition, and in compliance with all rules, regulations, ordinances, or laws. e. Services offered to Foundation i. Provide space at the Theatre, as well as program and maintenance support for activities and other Plaza Theatre improvement projects, to include meeting, program, fundraising, and event space at mutually agreed upon times at the Plaza Theatre. To the extent the Theatre is used, either by Foundation itself (i.e., for meetings or events), or by third parties (i.e., for fundraising events), any such use shall be subject to a Facility Use Agreement, in a form approved by the City Attorney and City Manager. ii. Promote the Foundation’s presence and programs, as permitted. iii. Publicly recognize the work, contributions, services, and/or donations received directly or indirectly from the Foundation. iv. The City will coordinate with the Foundation to erect and/or install signage and other Plaza Theatre Elements (as defined in paragraph III.a, below) at the Plaza Theatre. The approval, permitting and display of such signage and other monuments shall be subject to the City’s laws and regulations. Foundation will pay for the signage and other monuments and City shall provide personnel to assist in erecting and or install the signage and other monuments at the Plaza Theatre. v. Transfer of Existing Donations. In addition to the amounts set forth in Subsections vi. tThrough viii. bBelow, upon the full execution of this MOU by the Parties, the City shall transfer to the Foundation the funds that are existing within the City’s Plaza Theatre donation fund, currently One Hundred Sixty Five Thousand One Hundred Dollars ($165,100). Such amounts may be used by the Foundation for any purpose that is consistent with the Foundation’s corporate purposes. vi. Start-up contribution. The City will appropriate Seventy Five Thousand ($75,000), in the City’s Fiscal Year 2021/22 budget, to the Foundation for the start-up costs of starting the Foundation, including costs associated with incorporation, non-profit and tax deductible registration, communications, fundraising efforts, etc. vii. Start-up assistance. The City will provide the Foundation with legal assistance involved in incorporating and registering with the Internal Item 1M - 7 -- Revenue Service (IRS) and California Franchise Tax Board (FTB) as a non-profit organization. viii. Ongoing Contributions. Subject to appropriation by the City Council, the City shall contribute an annual amount of Fifty Thousand Dollars ($50,000) for the ongoing support of the Foundation, for a period of no less than four (4) additional years (City’s Fiscal Years 22/23, 23/24, 24/25, and 25/26). II. OBLIGATIONS OF THE FOUNDATION a. Governance/Administration i. Register with the Internal Revenue Service (IRS) and California Franchise Tax Board (FTB) as a non-profit organization, and maintain such status. ii. Meet federal, state and local charitable solicitation requirements, if the Foundation solicits funds. iii. Obtain and maintain any necessary permits, licenses, special insurance, equipment, and inspections for Foundation programs, activities, or events and pay associated costs or fees, if any. iv. Authorize the City to use the name and logo of the Foundation to promote the Foundation and its activities. v. Upon dissolution, donate any remaining funds pursuant to the terms of the Foundation’s Articles of Incorporation and Bylaws. b. Coordination i. Work with the Plaza Theatre Liaison to coordinate on Plaza Theatre plans, programs, needs, and projects. ii. Coordinate fundraising activities on Plaza Theatre property with the Site/Program Liaison. iii. The Foundation shall provide an annual statement to the City showing all donations, disbursements and funds held. This statement shall be provided to the City on February 1 of each year. Foundation shall provide any financial records requested by the City within 30 days following such request. c. Finances i. Comply with all IRS and FTB non-profit requirements to remain in good standing. ii. Donate interest on the funds to the City to support the operation and ongoing maintenance of the Plaza Theatre. iii. Donate specific, individual donations for the purchase and/or design and construction of Plaza Theatre features, as set forth in paragraph IV, below. III. NAMING RIGHTS FOR SPECIFIC PLAZA THEATRE AND ITS ELEMENTS Item 1M - 8 a. Right to Issue Naming Rights. The Parties acknowledge and agree that the Foundation will be better able to support the renovation and continued operation and long-term maintenance of the Plaza Theatre if it is able to raise funds through the issuance of naming rights for the Plaza Theatre and its component parts (“Naming Rights Opportunities”). Examples of potential Naming Rights Opportunities include, but are not limited to, the Theatre itself, the lobby, the seats, stage, entry patio, (the “Plaza Theatre Elements”). To the extent permitted by law, and subject to the City’s prior approval, as set forth in paragraph (c), below, the Foundation shall have the right to issue Naming Rights Opportunities to the Plaza Theatre and the Plaza Theatre Elements. b. Term of Naming Right. The name will be affiliated with the Plaza Theatre Element for the useful life of the Plaza Theatre Element. If the Plaza Theatre Element must be replaced or substantially repaired, it may be renamed for a new donor. The Foundation’s successors in interest or assigns shall assume the rights and obligations of this MOU. The Naming Rights Opportunity may be terminated under the following circumstances: i. Foundation and the City shall each individually retain the right to rescind the naming rights if, in their sole discretion, it is determined that (i) a previously- approved name has become inappropriate due to subsequent criminal acts or acts of moral turpitude of the Donor or the person or entity honored by the issuance of the naming rights, (ii) a Donor has failed to meet its financial obligations relating to a pledged donation, or (iii) any other factor relating to the Donor, the honoree, or the donation has arisen that would discredit the Foundation, the Plaza Theatre, or the City and/or is contrary to the City’s interests. c. City’s Prior Approval. Prior to issuing any Naming Rights Opportunity, the Foundation shall obtain the City’s written approval of the Naming Rights Opportunity, including as applicable, the proposed location, size, type of opportunity, any required signage/installation, expected donation amount, and the donor’s name. The City shall have thirty (30) calendar days to review and approve or deny any proposed Naming Rights Opportunity. i. The City’s City Manager has the authority to approve or disapprove a proposed Naming Rights Opportunity up to $100,000. ii. Naming Rights Opportunities in excess of $100,000 shall require specific approval by the City’s City Council. iii. The Foundation shall not be required to obtain City approval for dedication plaques, engraved tiles or bricks or donor walls. Such features shall be consistent with the design and functionality of the Plaza Theatre. d. Proceeds from Naming Rights. Other than reasonable Foundation operating expenses, the Foundation will use all donations it receives for the benefit of the Plaza Theatre, including the historic restoration, operation and ongoing maintenance of the Plaza Theatre. In the event the Foundation is dissolved, all Foundation assets will be distributed pursuant to Article VI of the Articles of Incorporation of The Palm Springs Plaza Theatre Foundation. Item 1M - 9 e. Costs. Any direct costs incurred in connection with the issuance of Naming Rights Opportunities shall be assumed and paid entirely by the Foundation or by Donors. As further described below, this includes, without limitation, the cost of signage, plaques, name plates, changes in lighting, and the like, and the cost of any marketing materials or events required to identify and engage prospective donors. f. No Property Interest. Notwithstanding any provision of this MOU, the Parties do not intend to convey any ownership or other interest in the Plaza Theatre and nothing in this MOU or any donation agreement shall be construed or interpreted as a grant of easement or any other interest in any property, including any portion of the Plaza Theatre. If this MOU or any provisions of this MOU are construed or interpreted by a court of competent jurisdiction as conveying an interest in real property among the Parties, this MOU shall immediately become of no further force or effect, without notice to or action by any Party. IV. DONATIONS TO FUND PLAZA THEATRE ELEMENTS a. It is understood that the Foundation shall have the right to solicit donations that are designated by an individual donor (the “Specific Donation”). The Specific Donation can be designated by the individual donor toward the Foundation’s endowment or for use towards the purchase and/or design and restoration of the Plaza Theatre, or the construction and installation of any Plaza Theatre Element. The individual donors and any conditions attached to the Specific Donation shall be consistent with the goals, values and objectives of the City and The Palm Springs Plaza Theatre Foundation and the design and functionality of the Plaza Theatre. V. DONATION AGREEMENTS Prior to acceptance of any Donation pursuant to Section III or IV, above, the City, the Foundation and the individual Donor shall separately execute an agreement regarding the terms and conditions attached to the Naming Rights Opportunity or Specific Donation. VI. INSURANCE The Foundation will obtain and maintain insurance coverage in amounts and of the types (i.e. general liability and directors and officers) as required by the City’s Risk Manager, based on the Foundation’s structure and activities. VII. AMENDMENT, RENEWAL AND TERMINATION a. The term of this MOU shall commence on the Effective Date and, unless sooner terminated by written agreement of the Parties, shall end on the expiration of ten (10) years following the Effective Date (“the Expiration Date”). Either party may renew this MOU for an additional period of ten (10) years to commence upon the Expiration Date. To exercise this option to renew, a party must deliver to the other party a written notice of its exercise of the option to renew at least sixty (60) days prior to the Expiration Date. b. Any modifications, assignments, alterations, or extensions must be in writing, signed, and approved by both Parties. Item 1M - 10 c. This MOU may be terminated by either Party upon 30 days written notice. d. Distribution of Proceeds Upon Expiration of the Term or Termination. At the expiration of the term or in the event of termination, all Foundation assets shall within forty-five (45) days be transferred to either the City or to another nonprofit fund, foundation or corporation to be used solely for operation and maintenance of the Plaza Theatre. VIII. INDEMNITY a. Each party agrees to indemnify, defend, and hold harmless the other party, its officers, agents and employees from any and all liabilities, claims, or losses of any nature, including reasonable attorneys’ fees and costs of suit, to the extent caused by, arising out of, or in connection with, the indemnifying party’s negligent or wrongful acts or omissions arising from its respective activities pursuant to this MOU. IX. DISPUTE RESOLUTION a. The Parties agree to work together in good faith to resolve disagreements that may arise under this MOU. Should such a disagreement arise, the Parties having authority to resolve the dispute will meet and negotiate in good faith toward a mutually satisfactory solution. If any disagreement cannot be resolved through such negotiations, the Parties will consider other alternative dispute resolution processes upon which they may later agree. However, if at any time a Party determines that circumstances so warrant, such Party may seek any available remedy without waiting to complete the informal meet and confer process. X. GENERAL PROVISIONS a. Assignment. Neither Party may assign or transfer all or any portion of its rights or obligations under this MOU to any third party, without obtaining the prior written consent of the other Party, which consent shall not be unreasonably withheld. Any purported assignment, without the other Party’s prior written consent, shall be void. b. Binding Effect. This MOU shall be binding on all heirs, successors and assigns of the Foundation and the City. c. Entire Agreement. This MOU contains the entire agreement and understanding of the Parties on this subject. The City and the Foundation understand, acknowledge and agree that no Party, or any agent or attorney for any Party, has made any promise, representation or warranty of any kind whatsoever, express or implied, not contained herein to induce the execution of this MOU. The City and the Foundation understand, acknowledge and agree that this MOU has not been executed in reliance upon any promise, representation, or warranty not contained herein. Item 1M - 11 d. Applicable Law. This MOU and all rights and obligations arising out of it shall be construed in accordance with the laws of the State of California. Any legal or administrative action arising out of this MOU shall be conducted in Riverside County, California. e. Warranty of Authority. The persons executing this MOU on behalf of the City and the Foundation represent and warrant that they are duly authorized to execute this MOU and to bind their respective Party to all terms and conditions of this MOU. d. Severability. If any section, subsection, sentence, clause or phrase of this MOU, or the application thereof to any of the Parties, is for any reason held invalid or unenforceable, the validity of the remainder of the MOU shall not be affected thereby and may be enforced by the Parties to this MOU. e. Notices. All notices, demands and communications between the City and the Foundation shall be in writing and shall be given by personal delivery, registered mail (return receipt requested, with postage prepaid), Federal Express, electronic mail, or any other reliable private express delivery service to the following addresses: City of Palm Springs The Palm Springs Plaza Theatre Foundation 3200 E. Tahquitz Canyon Way 3390 University Ave., 5th Floor Palm Springs, CA 92262 Riverside, California 92501 Justin.Clifton@palmspringsca.gov Attn: J.R. Roberts The foregoing names, addresses may be changed at any time by written notice, as provided above. f. Interpretation. This MOU has been prepared jointly by the Parties, with full access to legal counsel of their own. No ambiguity shall be resolved against any Party on the premise that it or its attorneys were solely responsible for drafting this MOU or any provision thereof. g. Counterparts. This MOU may be executed electronically, and in one or more counterparts, each of which shall constitute an original. IN WITNESS, WHEREOF, the Parties enter into this Understanding as of the Effective Date. SIGNATURE PAGE TO MEMORANDUM OF UNDERSTANDING BETWEEN THE PALM SPRINGS PLAZA THEATRE FOUNDATION Item 1M - 12 AND THE CITY OF PALM SPRINGS THE PALM SPRINGS PLAZA THEATRE FOUNDATION CITY OF PALM SPRINGS By: ___________________________ J.R. Roberts, President Date: ___________________ By: ___________________________ Justin Clifton, City Manager Date: ___________________ By: ___________________________ Name: ________________________ Secretary Date: ___________________ ATTEST: By: ___________________________ Anthony Mejia, City Clerk APPROVED AS TO FORM: By: ___________________________ Jeffrey S. Ballinger City Attorney Item 1M - 13 Item 1M - 14