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Home My WebLink About9/7/2005 - STAFF REPORTS (28) U r N * ��GogAiEO�," cq</FoBN�P City Council Staff Report DATE: SEPTEMBER 7, 2005 CONSENT CALENDAR SUBJECT: PUBLIC SAFETY COSTS FOR 2005 AMERICAN HEAT, PALM SPRINGS MOTORCYCLE AND HOT ROD WEEKEND FROM: David H. Ready, City Manager BY: Department of Parks and Recreation SUMMARY Road Shows, Inc. (RSI) has produced the American Heat, Palm Springs Motorcycle & Hot Rod Weekend since 2000, with the exception of 2002. The 2005 event will be held October 7th through October 9th on the Prairie Schooner Parking Lot and adjoining streets. RSI has requested that its total expense for City services, such as police, fire, parks, and public works support services, not exceed $24,000. RSI has represented to the City that expenses exceeding this amount would be cost prohibitive for their event and will compromise its ability to continue producing the event in Palm Springs. Initial analysis shows that City support costs for 2005 will be approximately $46,000 (RSI was billed $47,772 for these services in 2004). The overall cost analysis developed by the departments of Finance and Parks and Recreation estimates that the event will generate approximately $50,000 in direct tax revenues to the City, with an estimated $2 million economic benefit to the community. RECOMMENDATION: 1. Adopt Minute Order No. Authorizing the City Manager to modify and execute a Sponsorship Agreement, approved by the City Council via Minute Order No. 7718, July 20, 2005, with Road Shows, Inc. to produce the event and cap the reimbursement of City support costs at $24,000. Item No. 2 . Q. City Council Staff Report September 7, 2005— Page 2 American Heat STAFF ANALYSIS: RSI is a fully-licensed entertainment booking agency and event production company based in Reno, Nevada. RSI has produced the American Heat motorcycle event in the City of Palm Springs for four of the past five years. The 2000, 2001 and 2003 motorcycle & hot rod events were all produced and staged along Palm Canyon Drive in the City's Central Business District, and the 2004 event was staged at the Prairie Schooner Parking Lot and parts of Calle El Segundo east of the Hilton Hotel. RSI has been approved to hold the 2005 event at the Prairie Schooner location again this year. In 2000, 2001, and 2003, RSI paid costs associated with the event. In 2004, due to the event site location change, the Police Department recommended additional officers be assigned throughout the City to monitor associated event activities primarily in the entertainment areas of the Central Business District. RSI did not feel it should be charged for incurred costs by the City for activities outside the event venue. However, the City did bill RSI $47,711 for these additional costs. The following is a breakdown of the estimated amounts for the 2005 event. 2005 Event Cost Estimate Parks Department $ 2,500 Public Works Department $ 4,000 Fire Department $ 5,200 Police Department $34,300 (caveat: Police Department breakdown; approximately $12,300 for venue site, and $22,000 City wide) TOTAL ESTIMATE FOR 2005 $46,000 RSI has informed the City that it cannot financially afford to produce the event if City service costs exceed $24,000 in billings to RSI. RSI has requested that the amount of on site city services estimated at $24,000 be considered a cap on its total expenses to the City. Staff obtained information from an internal survey performed by the Palm Springs Hotel and Hospitality Association (PSHHA) in 2003 regarding estimated TOT collections attributable to the American Heat event in the City of Palm Springs. The event generated 1,871 room nights among ten of the major hotels in Palm Springs. This resulted in TOT and Sales Tax revenues of approximately $49,000, as verified from calculations developed by the Department of Finance estimates shown below. City Council Staff Report September 7, 2005—Page 3 American Heat Economic Tax 2003 Bike Weekend Benefit Benefit Number of attendees each day 6,000 Percentage staying in P.S. Hotels 12% Average length of stay 3 nights People per room 1.9 Expected Room Nights 2,880 Average Daily Rate $97.87 Hotel Rental $ 281,665 TOT Collections $ 32,415 Average Spending (daily, per person) $70.00 $1,680,000 Sales Tax $ 16,800 TOTALS $1,951,866 $ 49,215 The Department of Finance's figures shown above are believed to be conservative, and staff estimates that the revenues for the 2005 event will likely exceed these figures. A current review of the major hotel bookings for the event weekend indicate they are close to being sold out, with the bookings for the Wyndam and Hilton at 30% higher than a like weekend in 2004 (according to the PSHHA). Thus, if the Council approves the requested cap for city services at $24,000 and provides extra citywide police protection for approximately $22,000, the City may still make a small net profit notwithstanding the economic benefit to the community. Further, the PSHHA strongly endorses this event. A Sponsorship Agreement between the City and RSI is being finalized by staff and will be presented to the City Manager upon completion. The agreement will fully identify the responsibilities of both the promoter and the City and any additional requirements needed to produce the event as determined through the SEPT evaluation process. A copy of last year's Sponsorship Agreement was previously provided to City Council. FISCAL IMPACT: The estimated $22,000 police overtime costs for additional citywide security will be funded from the current police overtime line item budget ($750,000 appropriated in the current fiscal year). There is a positive fiscal impact to the City of roughly $24,000, based on staff's best assessment of support costs utilizing 2003 as a model. City Council Staff Report September 7, 2005— Page 4 American Heat ALTERNATIVE: Require the event promoter, RSI, to pay for all additional police expenses including off site security. eott Mikesell, Director David H. Ready, City tiger Department of Parks and Recreation Craig C�faves�Dir�Ele of Finance �,da hments: Minute Order American Heat MINUTE ORDER NO. AUTHORIZING THE CITY MANAGER TO MODIFY AND EXECUTE A SPONSORSHIP AGREEMENT, APPROVED BY THE CITY COUNCIL VIA MINUTE ORDER NO. 7718, JULY 20, 2005 WITH ROAD SHOWS, INC. TO PRODUCE THE EVENT AND CAP THE ANNUAL REIMBURSEMENT OF CITY SUPPORT COSTS AT $24,000. I, James Thompson, City Clerk of the City of Palm Springs, hereby certify that this Minute Order, authorizing the Palm Springs Police Department to pay for non- reimbursed employee overtime costs associated with the 2005 American Heat motorcycle event from October 7 through October 9 from within its adopted budget for FY05-06, was adopted by the City Council of the City of Palm Springs, California, in a meeting thereof held on the 7ch day of September, 2005. James "Thompson, City Clerk