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HomeMy WebLinkAbout17 - Donation Agreement with Crystal Cove Alliance= CITY OF o kin NEWPORT BEACH City Council Staff Report Agenda Item No. 17 May 28, 2013 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Manager's Office Dave Kiff, City Manager 949 - 644 -3001, dkiff @newportbeachca.gov PREPARED BY: Dave Kiff, City Manager APPROVED: 0` TITLE: Donation Agreement with Crystal Cove Alliance for Phase III Cottage Restoration ABSTRACT: The Crystal Cove Alliance is a non - profit organization ( "Alliance "), which oversees the management, operation and restoration of the beach cottages at the Crystal Cove Historic District. The Alliance approached the City of Newport Beach ( "City ") seeking a donation to assist with its Phase III restoration of 17 cottages in Crystal Cove ( "Project'). The Project is expected to last five years and cost $20 million. The Alliance is seeking a five year donation commitment from the City at $20,000 a year for a total of $100,000. RECOMMENDATIONS: 1) Authorize the City Manager to enter into the attached Donation Agreement with Alliance to provide funding for the Project. 2) Waive the administrative and Finance Committee grant/funding application review processes located in Resolution No. 2012 -117. FUNDING REQUIREMENTS: The attached agreement has a proposed five year term with a maximum donation of $100,000. There is adequate money within the General Fund for this donation. DISCUSSION: The Crystal Cove Historic District ( "District') is located in the southeastern part of the City and was listed on the National Register of Historic Places in June of 1979. The District is composed of 46 beach front cottages and is a unique example of a 1930s Southern California coastal community. The District is governed, in part, by the Donation Agreement with Crystal Cove Alliance for Phase III Cottage Restoration May 28, 2013 Page 2 California State Park's Public Use Plan ( "PPUP "). The four basic components of the PPUP include: (1) affordable overnight rentals; (2) educational and interpretive uses; (3) State Park operations; and (4) food service. The Alliance is the official non - profit partner of Crystal Cove State Park and assists with implementation of the PPUP. According to the Alliance, it "is dedicated to preserving the cultural, natural and historic resources of Crystal Cove." The Alliance works with the State to seek opportunities for rehabilitating cottages located within the District. To date, the Alliance has assisted in the restoration of 29 historic beach front cottages and is getting ready to begin work on the Project, which when completed will make available an additional 17 cottages. To assist with the Project's cost, the Alliance recently raised the rental rates of all cottages by 20 %. The new rental rates take effect July 1, 2013 and will yield approximately $20,000 per month in additional revenue. All rental money derived from the rent increase will be deposited into a restricted account to be used for the Project. However, even with the increased rental rates the Alliance requires additional funding to pay for the Project. At present, the City receives approximately $110,000 per year from transient occupancy taxes ( "TOT ") and the visitor's service fee ( "VSF ") collected from guests that stay at the cottages. The Alliance has requested the City rebate a portion of the collected TOT back to the Alliance to assist with the Project's cost. A similar request was made by the Alliance in 2007. At that time the City Council had concerns regarding the allocation of TOT to a specific project rather than to improving visitor services as a whole. The recommendation before the City Council today would not involve the rebating of TOT, but rather a donation from the General Fund. It is anticipated that once the additional 17 cottages are brought on line, the City's TOT and VSF share from the cottages will increase and allow additional opportunities to market the City's visitor services. ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action is not subject to the California Environmental Quality Act ( "CEQA") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. r Donation Agreement with Crystal Cove Alliance for Phase III Cottage Restoration May 28, 2013 Page 3 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: a� Dave Kiff, City Manager City Manager's Office Attachment: Donation Agreement 3 DONATION AGREEMENT BETWEEN THE CITY OF NEWPORT BEACH AND CRYSTAL COVE ALLIANCE This Donation Agreement ( "Agreement ") is entered into this — day of 2013 ( "Effective Date "), by and between the City of Newport Beach, a California municipal corporation and Charter City ( "City "), and Crystal Cove Alliance, a California non - profit corporation located at 45 Crystal Cove, Newport Coast, California 92657 ( "Alliance "). City and Alliance are at times individually referred to as "Party" and collectively as "Parties" herein. RECITALS A. The City Council has a positive history of directing revenue towards non- profit organizations, community groups, community events, enhancement projects or worthy programs which the City Council deems beneficial to resident's quality of life. B. Alliance is a non - profit organization that oversees the management, operation and restoration of the beach cottages in the Crystal Cove Historic District. C. Alliance intends to embark upon Phase III restoration work to restore the remaining seventeen (17) cottages located in the Crystal Cove Historic District; restoration is anticipated to cost twenty million dollars ($20,000,000) and take five (5) years to complete ( "Project "). D. Alliance is actively seeking contributions and requested a donation from the City to fund a portion of the Project. E. The City Council determined the Project will benefit the City's residents' quality of life by providing additional coastal recreational opportunities. NOW, THEREFORE, the Parties agree as follows: 1. DONATION The City agrees to donate to Alliance up to One Hundred Thousand Dollars and 00/100 ($100,000.00) over a five (5) year period paid out in five (5) equal installments of Twenty Thousand Dollars and 00 /100 ($20,000.00) a year ( "Donated Funds "). The Donated Funds shall be disbursed in Twenty Thousand Dollar and 00/100 ($20,000.00) increments by City to Alliance on July 1 of each calendar year this Agreement is in effect. 2. TERM The term of this Agreement shall commence on the Effective Date and shall continue in full force and effect until July 2, 2017, unless terminated earlier as provided herein. 3. RESTRICTIONS ON USE OF DONATED FUNDS The Donated Funds are subject to the following expenditure conditions ( "Approved Uses "): (a) The Donated Funds shall be expended solely for the purposes provided in Exhibit 'A" which is attached hereto and incorporated herein by reference; and (b) The Donated Funds shall not be used for any activity that would violate City, state or federal statutory or decisional law such as regulations affecting non - profit or tax exempt organizations exempt from taxation pursuant to the Internal Revenue Code. Alliance further warrants to City that the Donated Funds will be spent solely for the Approved Uses and the Donated Funds shall be used by Alliance during this Agreement's term otherwise the Donated Funds shall be returned to City, as provided in Section 5 below. 4. REPORTING AND ACCOUNTING REQUIRMENTS (a) At all times during the term of this Agreement, Alliance shall maintain true, proper, and complete books, records, and accounts (collectively, "Books and Records ") in which shall be entered fully and accurately all transactions taken with respect to the operations of Alliance under the Project and the expenditure of the Donated Funds. Alliance shall maintain the Books and Records in accordance with generally accepted accounting principles. (b) City reserves the right to designate its own employee representative(s) or its contracted representative(s) with a Certified Public Accounting firm who shall have the right to audit Alliance's accounting procedures and internal controls of Alliance's financial systems as they relate to the Project and to examine any cost, revenue, payment, claim, other records or supporting documentation resulting from any items set forth in this Agreement. Any such audit(s) shall be undertaken by City or its representative(s) at mutually agreed upon reasonable times and in conformance with generally accepted auditing standards. Alliance agrees to fully cooperate with any such audit(s). This right to audit shall extend during the length of this Agreement and for a period of three (3) years or longer, if required by law, following the date of any Donated Funds tendered under this Agreement. Alliance agrees to retain all necessary records /documentation for the entire length of this audit period. (c) Alliance shall, on May 1 of each calendar year of the term of this Agreement, furnish the City with a Balance Sheet and Income Statement Donation Agreement Page 2 describing the receipt and disbursement activities of Alliance with respect to the Donated Funds. In its sole and absolute discretion the City may also require Alliance to submit: (i) quarterly check registers and descriptions of each disbursement; (ii) budget -to- actual - results; and (iii) a statement of position describing the assets and liabilities of Alliance. In the event that an independent audit is conducted, Alliance shall forward a copy of the audited report to the City for review, including any Management Letter, Report on Internal Controls, or Reportable Conditions letter generated during the course of the audit. (d) Alliance agrees to exercise prudent financial management processes including proper oversight of all assets, budget preparation, and timely reporting including budget -to- actual- comparisons. (e) All Approved Uses shall be performed by Alliance or under Alliance's supervision. Alliance represents that it possesses the professional and technical skills required to perform the services required by this Agreement, and that it will perform all services with a standard of care and in a manner commensurate with the community professional standards. 5. USE OF DONATED FUNDS The Donated Funds shall be used solely by Alliance for the Approved Uses and for no other use. In the event that the Donated Funds are not used for the Approved Uses or are not expended by or before the expiration or earlier termination of this Agreement, Alliance shall notify the City in writing, and shall be obligated to return the remaining Donated Funds to City within thirty (30) calendar days. 6. INDEMNIFICATION To the fullest extent permitted by law, Alliance shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, volunteers and employees (collectively, the "Indemnified Parties') from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims "), which may arise from or in any manner relate (directly or indirectly) to this Agreement (including the negligent and /or willful acts, errors and/or omissions of Alliance, its principals, officers, agents, employees, vendors, suppliers, consultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable or any or all of them). Notwithstanding the foregoing, nothing herein shall be construed to require Alliance to indemnify the Indemnified Parties from any Claim arising from the sole negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless Donation Agreement Page 3 of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by Alliance. 7. INDEPENDENT CONTRACTOR In the performance of this Agreement, Alliance, and the agents and employees of Alliance, shall act in an independent capacity and are not officers, employees or agents of the City. The manner and means of performing the Approved Uses are under the control of Alliance, except to the extent they are limited by statute, rule or regulation and the expressed terms of this Agreement. Nothing in this Agreement shall be deemed to constitute approval for Alliance or any of Alliance's employees or agents, to be the agents or employees of City. Alliance shall have the responsibility for and control over the means of performing the Approved Uses, provided that Alliance is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Alliance as to the details of the performance or to exercise a measure of control over Alliance shall mean only that Alliance shall follow the desires of City with respect to the results of the Approved Uses. 8. PROHIBITION AGAINST TRANSFERS Alliance shall not assign, sublease, hypothecate or transfer this Agreement or any of the services to be performed under this Agreement, directly or indirectly, by operation of law or otherwise without prior written consent of City. Any attempt to do so without written consent of City shall be null and void. 9. NOTICES All notices, demands, requests or approvals to be given under this Agreement shall be given in writing and conclusively shall be deemed served when delivered personally or on the third (3rd) business day after the deposit thereof in the United States mail, postage prepaid, first class mail, addressed as hereinafter provided. All notices, demands, requests or approvals from Alliance to City shall be addressed to the City at: Attn: Dave Kiff, City Manager City of Newport Beach 100 Civic Center Drive P.O. Box 1768 Newport Beach, CA 92658 -8915 (949) 644 -3000 All notices, demands, requests or approvals from City to Alliance shall be addressed to Alliance at: Attn: Harry Helling, President & CEO 45 Crystal Cove Newport Coast, CA 92657 (949) 376 -6200 Donation Agreement Page 4 10. TERMINATION (a) Termination for Cause. Alliance shall be in default under this Agreement if Alliance fails or refuses to perform any duty required by the Agreement or performs in a manner inconsistent with the terms, conditions and restrictions in this Agreement. In such event, City shall give Alliance thirty (30) calendar days written notice to cure, if the default can be cured and City shall be entitled to terminate this Agreement if Alliance has not cured the default within the thirty (30) calendar day cure period. City shall be entitled to immediately terminate this Agreement if the default cannot be cured through corrective action. If terminated under this section, remaining Donated Funds shall be returned to the City pursuant to Section 5. (b) Termination without Cause. City may terminate this Agreement at anytime with or without cause upon seven (7) calendar days written notice to Alliance, any remaining Donated Funds in Alliance's possession at the time of termination shall be returned to City pursuant to Section 5. Upon termination, City shall have no obligation to provide any further Donated Funds to Alliance. (c) Specific Performance. Alliance agrees that the City has the legal right, and all necessary conditions have been satisfied, to specifically enforce Alliance's obligations pursuant to this Agreement. 11. WAIVER A waiver by either Party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 12. INTEGRATED CONTRACT This Agreement represents the full and complete understanding of every kind or nature whatsoever between the Parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 13. INTERPRETATION The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either Party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. Donation Agreement Page 5 14. AMENDMENTS This Agreement may be modified or amended only by a written document executed by both Alliance and the City and approved as to form by the City Attorney. 15. SEVERABILITY If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 16. CONTROLLING LAW AND VENUE The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. 17. EQUAL OPPORTUNITY EMPLOYMENT Alliance represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex, age or any other impermissible basis under law. 18. COMPLIANCE WITH ALL LAWS Alliance shall, at its own cost and expense, comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. 19. NO ATTORNEYS' FEES In the event of any legal dispute arising out of this Agreement the prevailing Party shall not be entitled to attorneys' fees. [SIGNATURES ON FOLLOWING PAGE] Donation Agreement Page 6 IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the day and year first above written. APPROVED AS TO FORM: THE CITY ATTORNEY'S OFFICE By: -C_ �- Aaron C. Harp City Attorney ATTEST: By: Leilani I. Brown City Clerk CITY OF NEWPORT BEACH, a California municipal corporation By: David Kiff City Manager CRYSTAL COVE ALLIANCE a California non - profit corporation By: Harry Helling President & CEO Jackie McDougall Vice President of Development Attachment: Exhibit "A"— Alliance's Phase III Restoration Proposal [END OF SIGNATURES] Donation Agreement Page 7 Exhibit "A" Alliance's Phase III Restoration Proposal Donation Agreement Page A -1 Phase III Restoration Project Scope of the Project: May 22, 2013 17 Cottages- all scheduled to be overnight rentals Complete infrastructure including roads, water supply, wastewater removal, electrical, fire protection, retaining walls, and boardwalk for pedestrian and electric cart access. CDP permit (Coastal Development Permit) Estimated Cost: S 20.0 Million Estimated Additional Annual Revenues Upon Completion: $1.2 million — all from overnight cottage rentals. Estimated Time and Cost to Complete Planning: r 1.5 years to complete Coastal Commission Permit (CDP) and construction planning documents. Planning costs estimated to be $2.5 million Estimated time to complete the entire project: 4 -5 years depending on fund raising results. Scope of Improvements: Construct 100% new infrastructure including soil stabilization walls, access roadway, water system, sewer system and new Electrical supply system. te Restore 17 historic cottages including 100% new utilities and life safety systems. :• Restore the landscape of the entire site.