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Home My WebLink About6/6/2007 - STAFF REPORTS - 2.I. of QALM Sp? r2 I " 9<lFORa CITY COUNCIL STAFF REPORT DATE: June 6, 2007 Consent Calendar SUBJECT: APPROVE AMENDMENT NO. 1 TO AGREEMENT NUMBER 4992 FOR TOURISM SERVICES BETWEEN THE CITY AND SMG FROM: David H. Ready, City Manager BY: Assistant City Manager-- Administration SUMMARY The budget for the Bureau of Tourism is set by contract and has not changed for several years. Tourism stakeholders, along with members of the Bureau's advisory board, have suggested that the Bureau's budget needs to be increased to remain competitive in the market and that the base budget be automatically adjusted each year by the percentage change in the Consumer Price Index (CPI) to ensure that the budget keeps pace with the rate of inflation. This action would approve an amendment to the existing Agreement for Tourism Services with SMG, increasing the base budget and providing for an automatic adjustment consistent with the change in the CPI. RECOMMENDATION: 1. Adopt Minute Order No. approving Amendment No. 1 to Agreement Number 4992 for Tourism Services between the City of Palm Springs and SMG. 2. Authorize the City Manager to execute all documents necessary to effectuate this action. STAFF ANALYSIS: The Palm Springs Bureau of Tourism (Bureau) is tasked with the responsibility of attracting visitors to Palm Springs through various outreach programs. The department's ability to accomplish this goal is strongly linked to the number of potential visitors reached by its efforts, which in turn is limited by its budget. Tourism stakeholders have long expressed the need forthe tourism budget to grow over time in some relation to the growth in TOT and the rate of inflation. The Bureau's budget, which is set by contract, is $1,481,516. Had the budget been ITFM MOl City Council Staff Report June 6, 2007 -- Page 2 Amendment No. 1 to Agreement for Tourism Services increased by the change in the Consumer Price Index (CPI) since SMG took over the Bureau in 1998, the tourism budget would currently stand at $1,841,363. In May 2006, the Bureau, along with members of its advisory board, presented to the City Council a proposed change in the Bureau's base budget, as well as an adjustment methodology to ensure that the budget for the Bureau would remain competitive and to keep pace with rising operational costs associated with marketing the City. Specifically, the advisory board is proposing that the Bureau's budget be adjusted to $1,877,000. This reflects the current base contract amount established in 1998 as adjusted by CPI over the past six fiscal years. This new base contract amount would take effect beginning with the fiscal year 2007-08. In addition, the advisory board is recommending that for each subsequent year, the base budget be automatically adjusted by the percentage change in the CPI for the twelve month period ending January 315 t. The proposed changes described above are supported by staff, the advisory board, the Bureau's marketing and budget subcommittees and numerous tourism stakeholders. It is widely felt that the revised funding mechanism will provide predictability for future budgeting and allow the Bureau to develop new and more sophisticated marketing programs. In orderto implement the proposed changes, the existing contract with SMG needs to be amended. The City Attorney's Office has prepared the attached amendment to Agreement 4992 between the City of Palm Springs and SMG for Council approval. FISCAL IMPACT: In Fiscal Year 2006-07, the City Council approved an additional $200,000 to the Bureau of Tourism for a total budget of $1,611,000. The proposed change in the Bureau's base budget would result in a $216,484 increase over the 2006-07 fiscal year budget. Troy Bufzlaff, s pant City Manager David H. Ready, Citger Attachments: 1. Minute Order 2. Amendment No. 1 to Contract No. 4992 MINUTE ORDER NO. APPROVING AMENDMENT NO. 1 TO AGREEMENT NUMBER 4992 FOR TOURISM SERVICES BETWEEN THE CITY OF PALM SPRINGS AND SMG --------------- I HEREBY CERTIFY that this Minute Order, approving Amendment No. 1 to Agreement Number 4992 for Tourism Services between the City of Palm Springs and SMG was adopted by the City Council of the City of Palm Springs, California, in a meeting thereof held on the 6�h day of June 2007. JAMES THOMPSON City Clerk 0(D 3 FIRST AMENDMENT TO AGREEMENT FOR TOURISM SERVICES This First Amendment ("First Amendment") is made and entered into this day of June, 2007, by and between the CITY OF PALM SPRINGS, a municipal corporation ("City') and SMG, a Pennsylvania general partnership ("Manager"). RECITALS On or about November 3, 2004, City and SMG, a Pennsylvania bcncral partnership ("SMG") entered into the "Agrcement for Tourism Services" ("Agreement"), pursuant to which SMG agreed to organize, manage and coordinate all advertising, licensing, marketing and public relation activities that promote the City for recreational, cultural, educational, entertainment, professional, social, corporate and other activities. The Agreement sets forth the compensation to be paid to Manager for services rendered. City and Manager now desire to make certain changes to the compensation paid to Manager by setting forth a new base budget amount and incorporating a provision to automatically adjust the budget each year as detennined by the percentage increase in the Consumer Price Index (CPI). AGREEMENT The recitals contained above are incorporated herein by reference and the Agreement is hereby amended as follows: I. Section 5.1 "Tourism Budget" is amended to read as follows: "5.1 Tourism Budget. The Tourism Budget for the 2007-2008 Fiscal Year shall be$1,877,000. Each, subsequent Fiscal Year during the term of this Agreement, the new amnual Tourism Budget shall be detennined by increasing the then current Tourism Budget by an amount equivalent to the annual percentage increase recorded in the Consumer Price Index (CPI) —All Urban Consumers For Los Angeles-Riverside-Orange County, California for the prior twelve (12) month period ending-January 31. Each new annual Tourism Budget is subject to and contingent upon fiords being appropriated therefore by the City Council of City for each fiscal year covered by the Agreement. If such appropriations are not sufficient to fully fund a new annual Tourism Budget, such annual Tourism Budget shall be equal to the amount appropriated by the City Council for such fiscal year. In the event there is no increase, or there is a decrease in the CPI for any such period, the Tourism Budget will not increase and will remain at the same amount as the previous fiscal year. SMG shall receive no remuneration for its services under this Agreement- The Tourism Budget shall be applied to the operation of the Visitor Center and Palm Spiings Tourism, including but not limited to 0 J-% 1003/002/21823 01 Page 1 of 3 the Director oFToutism's compensation, marketing and promotion costs, and reimbursement for actual and necessary expenditures made by SMG in the operation of Palm Springs Tourism of whatever kind, including but not limited to, reproduction costs, telephone expenses and transportation expenses approved by the Authorized Representative in advance. The Tourism Budget shall include the attendance of all necessary members of the Bureau of Tourism at all project meetings reasonably deemed necessary by the City; SMG shall not be entitled to additional compensation for attending said meetings. a. Line Item Budget. No later than March I" in each Fiscal Year that the Agreement is in effect, that the Agreement is in place, SMG shall provide the City Manager with a proposed line item budget for the Tourism Budget for the upcoming Fiscal Year- The line item budget shall be prepared in accordance with City's budgetary practices and all applicable laws and regulations and shall correlate to the Onc-Year plaza for the upcoming Fiscal Year. All Special Events shall be listed as separate line items- Prior to implementation and award of the Tourism Budget for an ensuing year, the line item budget shall be subject to approval by the City Council. b. Tourism Budget Amount. Each Fiscal Year during the tern of this Agreement, the total Tourism Budget will be established by a resolution which is adopted by the City Council as part of the City's annual fiscal budget. The Director o f Tourism shall submit the proposed Tourism Budget for each upcoming Fiscal Year as set forth I Section 5.1(a). c. Expenditure in Excess of Budget. SMG shall not, without written authorization by City, incur in any Fiscal Year obligations in excess of the total then applicable Tourism Budget approved by City. In the event SMG becomes aware of any such obligations, SMG shall immediately inform City in writing of the nature, amount and due date for such obligations, and written instructions as to how to proceed. Excessive expenditures, the failure to notify the City of such expenditures or the failure to follow the City's procedures shall constitute a del'ault- 2. Except as expressly provided herein, all other terns and conditions of the Agreement shall retrain in full force and effect. [Signature Block on Next Page] 1003/002/27823 01 Page 2 of 3 IN WITNESS WHEREOF, the parties hereto executed this First Amendment to be effective as of the Dale First written above. CITY OF PALM SPRINGS, a municipal corporation Bye City Manager ATTEST: SMG, a Pemisylvania general partnership By: City Clerk Name Title APPROV S TO FORM: City Attokrey 1003/002/2782301 Page 3 of