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Home My WebLink AboutS15 - Civic Center Concession Agreement w/24 Carrotsor CITY OF NEWPORT REACH FOB'' City Council Staff Report Agenda Item No. S15 April 23, 2013 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Manager's Office Dave Kiff, City Manager 949 - 644 -3002, dkiff @newportbeachca.gov PREPARED BY: Tara Finnigan, Public Information Manager APPROVED: lk-Anl " V TITLE: Civic Center Concession Agreement With 24 Carrots, LLC ABSTRACT: The City of Newport Beach (City) issued a request for proposals (RFP) for food services operations at the new Civic Center in November 2012. Four proposals were received by the City. After a thorough review and selection process, staff is recommending approval of a concession agreement with 24 Carrots, LLC to operate 'Bistro 24 Express" and provide catering services at the Newport Beach Civic Center. RECOMMENDATION: 1. Select 24 Carrots, LLC as the food services operator at, and caterer for, the Newport Beach Civic Center. 2. Waive City Council Policy F -7 and authorize the City Manager to negotiate and execute a Civic Center Concession Agreement based upon the key provisions outlined in this staff report. FUNDING REQUIREMENTS: The concession is expected to bring in a base rent of $24,000 in year one with the possibility of additional revenue through percentage rent. The base rent is scheduled to increase every year Bistro 24 Express is in operation. Civic Center Concession Agreement With 24 Carrots, LLC April 23, 2013 Page 2 DISCUSSION: Background The Newport Beach Civic Center project included the addition of 17,000 square feet of space to the Central Library. Within that additional space is a 757- square -foot; "grab and go" cafe designed to serve library patrons, City Hall and park visitors, and employees assigned to work at the new Civic Center. Request for Proposals On November 21, 2012 the City published RFP No. 13 -19 soliciting proposals for a food services operator for the cafe space. Prior to the submittal deadline of January 9, 2013, the City received proposals from the following: 24 Carrots (operating as Bistro 24 Express), The Coffee Connection, Mustard Cafe and Subway. Selection Process Staff members from the City Manager's Office, Finance Department and Community Development Department evaluated each of the proposals through a multi -step process. First, each member of the panel individually reviewed and evaluated each proposal based upon an established set of technical criteria. Then, the panel interviewed representatives from each of the proposing firms. During the interviews, the proposers were asked to elaborate on their experience in food service operations, menu offerings, catering abilities, and administrative structure. Three of the four proposers emphasized the importance of the catering operation to the cafe site's viability and expressed a strong desire in obtaining exclusive catering rights to the Civic Center complex. The panelists submitted separate scores for each proposal, based upon the established criteria and interviews. The scores were combined, averaged and the vendors were ranked accordingly. 24 Carrots received the highest score. Mustard Cafe was ranked second. Since there was only a 5% differential between the top two proposers (24 Carrots and Mustard Cafe), the panel went on unannounced site visits to the nearest 24 Carrots and Mustard Cafe locations to anonymously sample their food offerings and observe their operations. This final step helped the panel distinguish the top two firms and affirmed the determination that 24 Carrots is the most qualified firm to operate the cafe at the new Civic Center. Civic Center Concession Agreement With 24 Carrots, LLC April 23, 2013 Page 3 Recommendation 24 Carrots, LLC possesses the qualifications and experience necessary to operate the caf6 space and provide catering services to the variety of meetings and events that will be held at the Civic Center. The panel believes 24 Carrots' Bistro 24 Express concept offers menu items and price points that will be attractive to library patrons, Civic Center and park visitors, event organizers and City employees. Finally, the experience and support resources possessed by 24 Carrots will minimize the lead time needed to open the cafe. Proposed Agreement Provisions The key provisions of the agreement are as follows: Term - Five years, with two, five -year extension options Rent (Years 1 through 5) - The greater of Base Rent or Percentage Rent as detailed below. Percentage Rent* Base Rent ** Year 1 8% $24,000.00 Year 2 8% $25,200.00 Year 3 8% $26,460.00 Year 4 8% $27,783.00 Year 5 8 % $29,172.15 *Monthly rent, percentage of gross sales. * *Upon each successive anniversary of the Effective Date of the agreement, the Base Rent shall be increased five percent (5 %). Rent (Years 6 through 10) - The greater of Base Rent or Percentage Rent as detailed below. Percentage Rent Year 10% Year 7 10% Year 8 10% Year 9 10% Year 10 10% Base Rent (5% annual increases $30,630.75 $32,162.29 $33,770.40 $35,458.92 $37,231.87 Civic Center Concession Agreement With 24 Carrots, LLC April 23, 2013 Page 4 Rent (Years 11 through 15) -The greater of Base Rent or Percentage Rent as detailed below. Percentage Rent Year 11 10% Year 12 10 % Year 13 10% Year 14 10% Year 15 10% Base Rent (5% annual increases $39,093.46 $41,048.14 $43,100.54 $45,255.57 $47,518.35 Catering Revenue - 13% for food and beverage and 5% for equipment rentals. Based on gross sales. Land Use Restrictions - 24 Carrots will adhere to the Special Land Use Restrictions agreed upon by the City and The Irvine Company for the Civic Center property as they pertain to the operation and marketing of the cafe space. The City Manager will consult with The Irvine Company prior to executing the concession agreement to ensure compliance with the restrictions. Hours of Operation - Monday through Thursday 7:00 a.m. to 8:00 p.m. Friday 7:00 a.m. to 6:00 p.m. Saturday 8:00 a.m. to 6:00 p.m. Sunday 12:00 p.m. to 5:00 p.m. (Hours subject to change with City consent based upon business conditions.) Catering - Subject to certain limitations (e.g., City Council meetings, etc.), 24 Carrots shall have exclusive catering rights for events held within the Civic Center. Alcohol sales and service would be permissible at catered events only with the City's prior written approval and the applicable Alcohol Beverage Control license. Alcohol sales are not permitted as part of the normal business operations of the cafe space. There was some initial concern at the staff level about the exclusive catering rights provision. However, this vendor and others stressed that the viability of the business activity is in question without site exclusivity. Additionally, using a single catering source allows the City staff members who coordinate room reservations and event planning to have a longer -term relationship with key catering personnel to help make events go smoothly. Civic Center Concession Agreement With 24 Carrots, LLC April 23, 2013 Page 5 The staff review included evaluating various vendors' ability to effectively and flexibly deliver a variety of catering services and menus, and staff believes that 24 Carrots is a top quality respondent in that regard. ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action was previously analyzed under the Environmental Impact Report prepared for the Civic Center Project pursuant to the California Environmental Quality Act ( "CEQA "). In either event, staff recommends the City Council find this action qualifies for a Class 1 categorical exemption under CEQA Regulation Section 15301 because it involves the leasing of interior space within an existing public structure with negligible or no expansion of use beyond that existing at the time of this determination. NOTICING: This agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers this item). Submitted by: Tara Finnigan Public Information Manager