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HomeMy WebLinkAboutC-3409 - Management Agreement for the Newport Theater Arts Center - 2501 Cliff Drive• MANAGEMENT AGREEMENT By and Between THE CITY OF NEWPORT BEACH AND FRIENDS OF THE NEWPORT THEATRE ARTS CENTER This Management Agreement (Agreement) entered into as of May 1, 2001 (Effective Date) between the City of Newport Beach (City) and the Friends of the Newport Theatre Arts Center (Manager), is made with reference to the following: RECITALS A. City is the owner of the real property, structures, and related improvements that are commonly known as the Newport Theatre Arts Center, located at 2501 Cliff Drive in the City of Newport Beach. B. Manager is a non-profit corporation organized pursuant to and in compliance with the provisions of California law and is presently in good standing. Manager was organized by, and its members include, individuals who have developed expertise in the operation of a community theatre and the production of stage plays and similar events. C. In 1981, City adopted a policy that designated the Property as the City's community theatre, a designation that is commonly understood to describe a specific type of theatrical operation. D. Since 1981, Manager has been primarily responsible for the community theatre productions and program as well as the day to day management of the Property. E. Since 1981, Manager has invested more than $185,000 in the Property including theatre lighting, building remodeling, seating, stage turntable, sound equipment and dressing room improvements. F. The City Council of the City of Newport Beach (City Council) has determined that Manager is uniquely qualified to conduct a community theatre program on, and otherwise manage the use of, the Property. Manager is uniquely qualified because of the skill and knowledge of its members and the practical experience that Manager has gained from the operation of a community theatre program on the Property for more than twenty years. G. The City Council has determined that this Agreement and the use of the Property as a community theatre is consistent with the City -1- Charter, the Newport Beach General Plan and Zoning Ordinance and all other applicable Federal, State and local laws. H. The City Council has also determined that this Agreement will allow the Property to be used for community meetings conducted by and/or on behalf of community organizations that will benefit and serve the interests of nearby residents. NOW, THEREFORE, in consideration of the following covenants and promises City and Manager agree as follows: ARTICLE 1 SUBJECT OF AGREEMENT 1.1 Purpose of the Agreement The purpose of this Agreement is to provide for the management of the Property in a manner that will allow Manager to continue to operate a community theatre program on the Property. This Agreement is also intended to designate Manager as the entity responsible for the supervision and control over the use of the Property by other community groups .and organizations. The Parties also intend that this Agreement reflect and memorialize the manner in which Manager has conducted its community theatre program for the benefit of the City for more than twenty (20) years. 1.2 The Property The Property that is the subject of this Agreement includes the structures, improvements and real property located at 2501 Cliff Drive in Newport Beach. The Property includes the Theatre, parking areas and related improvements including Equipment purchased by Manager before or after the Effective Date that is considered a fixture pursuant to California law. 1.3 Theatre The word "Theatre" refers to the theatre building on the Property. -2- 1.4 City City is the City of Newport Beach, a charter city and includes the officers and employees of the City of Newport Beach. 1.5 Manager Manager is the Friends of the Newport Theatre Arts Center, a California nonprofit public benefit corporation organized for the purpose of operating a community theatre program in a manner which will serve the interests of, and benefit, members and the community. Manager includes all officers, agents, volunteers and employees of the Friends of the Newport Theatre Arts Center. 1.6 Reserved Period The term "Reserved Period" refers to one of the three (3) two -week periods that Manager is required to designate pursuant to Article 8 and during which the Property is available for use by a Third Party. 1.7 Third Party The term "Third Party" shall refer to any individual, group or organization, other than the Manager or any individual, group, or organization acting pursuant to an agreement with the Manager, that requests approval from City to use the Property during all or a portion of any Reserved Period. ARTICLE 2 APPOINTMENT OF MANAGER City appoints Manager and Manager accepts appointment as Manager for the Term pursuant to the terms and conditions of this Agreement. ARTICLE 3 GENERAL PROVISIONS 3.1 Non-interference Manager shall be entitled to perform its duties as Manager of the -3- Property for the Term without hindrance or interruption except for the exercise of City's rights pursuant to this Agreement and City's right to inspect the Property pursuant to its police power. City shall also have the right to enter and/or inspect the Property to perform its duties pursuant to this Agreement and to re-enter the Property should Manager be in breach or default. 3.2 Condition of Property Manager will keep City informed as to the condition of the Property including soil conditions, the condition of structures, hardscape and landscaping, and the condition of utilities. 3.3 Ownership of Improvements During the Term of this Agreement, City shall hold title to the Property and Manager will retain title to the personal property that Manager purchased before or after the Effective Date that is necessary or convenient to the operation or maintenance of the Theater. Manager has, during the past twenty years, purchased and installed fixtures, machinery, computers, controls, rigging, sound and lighting apparatus, staging, costumes, props, merchandise, trade fixtures (collectively, the "Equipment") that have been constructed, installed or placed on or in the Property by Manager. Any Equipment purchased by Manager prior to, or after, the Effective Date that is considered a fixture pursuant to California lawshall become the property of the City upon the expiration or termination of this Agreement 3.4 Surrender of Property On expiration of the Term or earlier termination of this Agreement, Manager shall peaceably and quietly leave and surrender the Property to City in good order, condition and repair, reasonable wear and tear and obsolescence excepted. Manager shall deliver to City all assignable contracts, agreements, and other documents related to the operation, maintenance or use of the Property. -4- ARTICLE 4 TERM 4.1 Duration and Commencement The initial term ("Initial Term") of this Agreement shall commence on the Effective Date. The Initial Term shall expire on April 30, 2011, unless this Agreement is terminated earlier as provided in Article 17. 4.2 Extension of Term The term of this Agreement will be automatically renewed for an additional five (5) years (Initial Extension) unless either party provides the other party with written notice of non -renewal at least (90) days prior to the expiration of the Initial Term of this Agreement. The Term of this Agreement shall be extended for a second five (5) year period (Second Extension) upon expiration of the Initial Extension unless either party provides the other with written notice of non -renewal at least ninety (90) days prior to the expiration of the Initial Extension. 4.3 Annual Extension Assuming the Tenn of this Agreement is extended as provided in Section 4.2 and Manager is not in default upon expiration of the Second Extension, the Term of this Agreement shall be automatically extended for successive twelve-month periods after the Second Extension (Annual Extension(s)). This Agreement shall expire at the end of any Annual Extension if either party gives the other party written notice of non - renewal no less than sixty (60) days prior to the expiration of any Annual Extension. 4.4 Extensions The Initial Extension, the Second Extension and the Annual Extension(s) are occasionally referred to as the "Extensions" or Extended Term" ARTICLE 5 DUTIES OF MANAGER 5.1 Duties of Manager The duties of the Manager include the following: -5- 5.1.1 Operate and maintain a community theatre program (Program) in accordance with the provisions of Article 6. 5.1.2 Maintain, and replace as necessary, all theatrical stage lighting, sound apparatus, computers, sets and other equipment and facilities necessary to the operation of a community theatre. 5.1.3 Authorize, manage and supervise the use of the Property by any Third Party as provided in this Agreement. ARTICLE 6 PROGRAM STANDARDS AND OPERATION As primary consideration for this Agreement, Manager shall operate the Program in accordance with the criteria and objectives specified in this Article. 6.1 Productions The Program shall offer to the general public a minimum of four theatrical productions during each twelve-month period during the Term or any Extended Tenn. The quality of the theatrical productions shall equal or exceed the high quality productions that Manager has presented at the Theatre during the past twenty (20) years. 6.2 Open to Public The theatrical productions shall be open to the general public at a reasonable admission price. The admission price shall be established at a rate that encourages attendance by all economic segments of the community while providing income that, when combined with other sources of revenue, will fully fund the operation of the Program and the maintenance obligations of Manager. 6.3 Volunteers The Program shall be administered by experienced volunteers and/or paid personnel capable of operating and managing the Property in good condition, producing high quality theatrical productions and to performing the fund raising and other tasks necessary to a successful Program. -6- 6.4 Variety The Program shall include a variety of theatrical, cultural or artistic productions to ensure that the community is offered a wide range of entertainment. ARTICLE 7 ANNUAL BUDGET 7.1 Budgeting Schedule 7.1.1 Initial Budget Manager shall prepare and make available to the City an annual budget (Budget) covering its planned operations for each full twelve- month period from August 1 through July 31 during the Initial Tenn and any Extended Term. 7.1.2 Annual Financial Report Manager shall make available to City for inspection during normal business hours any financial statement Manager is required to prepare pursuant to State law. 7.2 Contents of Budget The Budget shall state, as appropriate and in reasonable detail: (i) the proposed rates and charges for the use of the Theater; (ii) all anticipated revenues and sources of funds of Manager, including contributions; (iii) the expenditures proposed to be made by Manager in fulfilling its obligations pursuant to this Agreement; (iv) all other budgeted expenditures of Manager, if any; (v) cash reserves, if any. 7.3 Records Manager shall keep and maintain complete, accurate and customary records and books of account on all sales and expenditures, whether for cash or on credit, and all business transactions made with respect to the Property during each year. These records shall be retained for a period of not less than three (3) years after the end of the operating year (August 1 through July 31) during which the records or books were prepared. City shall be entitled, upon reasonable notice and during business hours, to inspect and make copies (at City's costs) of any records and books required by this Section. -7- 7.4 Audit City shall, once per year and at its cost, be entitled to conduct an audit of all records and books of account required to be maintained pursuant to this Agreement or State law. 7.5 Fiscal Policy Manager will adhere to the fiscal policy that has characterized Manager's use of the Property during the preceding twenty years. Manager agrees to continue to maintain an account with sufficient funds to cover the anticipated maintenance obligations of Manager during the following twelve months (Maintenance Account). Manager also agrees that, should revenue from ticket prices and other sources exceed the costs of operating the Program and funding the Maintenance Account, the excess funds shall be used exclusively to improve the quality of the Program, the Property or the Equipment. ARTICLE 8 USE OF PROPERTY 8.1 Permitted Use by Manager In addition to the Program, Manager may conduct benefits, fund-raising events, previews, receptions and other similar activities that are related to the operation or funding of the Program, the presentation of any artistic or cultural event or the improvement of the Property. Manager may conduct incidental operations such as limited food service, the service of alcoholic beverages as and to the extent permitted by law, catering, concessions, and limited retail sales in conjunction with any of the events or activities, and for the purposes, described above. The uses and activities authorized in this Section are referred to as Permitted Uses. 8.2 Use of Property By Manager Except for the Reserved Periods, Manager shall have the exclusive right to use or authorize the use of the Property. Manager may enter into agreements with any individual or entity authorizing use of the Property for Permitted Uses. Manager shall authorize use of the Property by any individual, group or organization that owns residential or commercial parcels in the vicinity of the Property for meetings or community events -8- of limited duration provided the meeting or event will not interfere with Manager's use of the Property. 8.3 Use of Property By Third Party Manager shall permit Third Party use of the Property during all or a portion of any Reserved Period for plays, performances, or cultural/artistic activity in accordance with the provisions of this Section. 8.3.1 Manager shall, within sixty (60) days after the Effective Date, and every twelve months thereafter during the Term and any Extended Term, provide City with a schedule identifying at least three (3) two -week periods when the Property is available for Third Party use. 8.3.2 City shall, after consultation with Manager, establish criteria and procedures for selecting any Third Party to be granted a license for use of the Property during all or a portion of any Reserved Period. The criteria for Third Party use for extended periods shall, in light of the nature and designation of the Property, give priority to use by any qualified and experienced non-profit theatrical production group or organization comprised of Newport Beach residents. 8.3.3 City shall not approve the Third Party use of all or a portion of the Property at any time other than a Reserved Period without the express consent of the Manager. City shall only authorize Third Party use of the Property pursuant to a license agreement and subject to strict compliance with all conditions of approval and any rules adopted by the Community Services Department of City. The license agreement shall specify that all Third Party use of the Property is subject to the control and supervision by Manager and shall establish conditions on Third Party use that fully protect Manager and the Property. City shall indemnify, defend and hold Manager harmless with respect to any damage, loss or liability resulting from use of the Property by any Third Party. 8.3.4 Manager shall determine the technical and supervisory personnel, if any, whose presence and involvement is required as a condition of permitting Third Party use of the -9- Property and Equipment. Manager shall, in determining the necessary technical and supervisory personnel, consider the extent to which the Third Party intends to use the Equipment and nature of the production to be presented by the Third Party. The Manager shall require only the personnel necessary to ensure that Third Party use will not damage the Equipment and that Third Party use of the Property or Equipment will not disrupt or impair the Manager's use of the Property. Manager shall authorize the Third Party to provide any technical or supervisory personnel deemed necessary upon proof that the personnel are capable and experienced. Manager shall provide necessary technical and/or supervisory personnel upon request or in the event that Third Party is unable to provide experienced and capable personnel. 8.3.5 City shall, after consultation with Manager, establish a uniform schedule of fees or charges (which may be changed from time to time) to be paid by any Third Party for use of the Property, use of the Equipment, or .to pay for the services of qualified technical and/or supervisory personnel. City shall retain revenue generated by fees and charges for use of the Property and City reserves the right to modify or waive fees charged any Third Party for use of the Property. City shall transmit to Manager the revenue generated by use of the Equipment and the service of technical or supervisory personnel provided by or on behalf of the Manager. City shall not, without the prior consent of the Manager, waive or reduce fees or charges for use of the Equipment or the services of technical or supervisory personnel provided by or on behalf of the Manager. 8.4 Change of Use Manager shall use the Property in full compliance with this Agreement unless Manager has received the prior written consent of City authorizing a use other than a Permitted Use. The consent may be withheld at City's sole discretion. -10- 8.5 Compliance with Laws Manager shall not use the Property in a manner likely to cause a public or private nuisance, to damage the Property or equipment or to cause injury to any person. Manager shall not violate any local, state or federal law in the renovation, maintenance, management or operation of the Property or Theatre. 8.6 Zoning and Planning Manager shall be entitled to repair, alter, and modify the structures and improvements on the Property in accordance with the provisions of the Zoning Code, provided Manager complies with this Agreement. Manager shall also use the Property in conformance with the Newport Beach General Plan and all applicable ordinances and policies of the City. 8.7 Nondiscrimination 8.7.1 Manager shall not discriminate against any person or group of persons, on account of race, color, creed, religion, gender, sexual orientation, marital status, national origin, or ancestry, in the operation, management, use or occupancy of the Property. 8.7.2 Manager agrees not discriminate on the basis of gender, sexual orientation, marital status, race, color, religion, creed, ancestry or national origin of any person with respect to any agreement, license, or contract related to the alteration, repair, operation, use or management of the Property. 8.7.3 All contracts, licenses, and agreements between Manager and any individual or entity with respect to the Property or the Program shall contain non-discrimination provisions substantially similar to this Agreement. ARTICLE 9 REPAIRS AND MAINTENANCE 9.1 Manager's Obligations Manager shall, at Manager's sole cost and expense, perform all routine and recurring maintenance, including replacement if necessary, to keep the theatrical stage, lighting, sound equipment, telephone equipment, -11- theatre seats, kitchen equipment and appliances and furniture and furnishings in good condition and repair. 9.2 Citv's Obligations City will use reasonable efforts to maintain the Property consistent with levels of maintenance during the past twenty years. City shall annually inspect the property and, after consultation with Manager, determine the nature and extent of the repairs and maintenance that should be undertaken in the succeeding twelve months. City shall establish a fund or account for purposes of funding necessary maintenance and repair of the Property. City will also use reasonable efforts to repair any conditions that would hinder Manager in the performance of its duties and responsibilities. The maintenance and repair obligations of City pursuant to this subsection are limited to the funds appropriated, during any fiscal year, by the City Council for the express purposes specified in this subsection. City shall perform the following routine and recurring maintenance and repair subject to the provisions of this Section. 9.2.1 The maintenance of the exterior and interior surfaces of the Theatre (including patching and resurfacing the roof membrane and painting or other protective treatment of the exterior wall of the Theater); 9.2.2 The maintenance of the public rest rooms (including repairs or replacements of tile or rest room fixtures); 9.2.3 The maintenance of electrical systems serving the Theatre and the repair and replacement of components; 9.2.4 The maintenance of all pipes and plumbing systems serving the Property and the repair and replacement of components; 9.2.5 The maintenance of all building service equipment (includes HVAC equipment, conveyance systems, and fire, life safety, and emergency equipment) and the repair and replacement of components; 9.2.6 The maintenance and repair of all carpeting, flooring, drapes, window coverings and similar items; 9.2.7 The maintenance and repair of all exterior lighting, landscaping, signage, parking facilities and hardscape; -12- 9.2.8 The provision of all janitorial services and supplies. ARTICLE 10 STATUS AND MANAGEMENT OF MANAGER 10.1 Nonprofit Status During the Term, Manager shall maintain its status as a California public benefit nonprofit corporation in full compliance with the California Nonprofit Corporation Law (California Corporation Code Section 5000 et seq.). Manager shall also maintain its qualification as a tax-exempt organization under 501(c)(3) of the Internal Revenue Code or any successor statute. 10.2 Executive Committee During the Term, Manager shall appoint an Executive Committee consisting of no more than five (5) members. The Executive Committee shall be authorized by Manager to interact with City and promptly respond to problems or concerns expressed by City or members of the general public relative to the operation of the Program. ARTICLE 11 ALTERATIONS Manager shall obtain the written consent of City prior to making any structural alterations to the Property or any structure on the Property. Manager shall be solely responsible for all costs and expenses incurred in making any such alteration. All alterations shall be surrendered with the Property when this Agreement expires or terminates. All structural alterations shall be made by a licensed contractor. ARTICLE 12 UTILITIES, TAXES, AND FEES 12.1 Public and Private Utility Services City will pay all charges for all public or private utility services and all sprinkler systems and interior protective services provided to or for the Property. Manager will comply with the terms and conditions of contracts relating to such services. City shall not be liable to Manager for any failure or defect in the supply of any utility. -13- 12.2 Taxes, Assessments and Charges Except as provided in Section 12.3, Manager is not responsible for any taxes, assessments, fees, charges, and levies of every type and character, including all interest and penalties, that may be imposed, assessed or levied on the Property or any occupancy or use of the Property. 12.3 Possessory Interest In accordance with California Revenue and Taxation Code Section 107.6(a) and Health and Safety Code Section 33673, City states that by entering into this Agreement, a possessory interest subject to property taxes may be created, and if so, that Manager shall pay any such tax or assessment. ARTICLE 13 LIENS 13.1 Timely Payment Manager shall pay, prior to delinquency, for all work performed and material furnished to the Property by Manager or on Manager's behalf that may result in a lien on the Property. 13.2 Written Notice Manager shall give City written notice of any claim or lien filed against the Property and any action or proceeding instituted affecting the title to the Property that is related to Manager's work on, or improvement of, the Property. ARTICLE 14 INDEMNIFICATION/INSURANCE 14.1 City Indemnity City shall defend, indemnify and hold harmless Manager from and against any and all claims, damages, and losses that are in any way related to the condition of the Property, any maintenance or repair City is required to perform pursuant to this Agreement, or any act or omission of City. City's obligations do not extend to claims, damages or losses that are proximately caused by the sole negligence, fraud or willful misconduct of Manager. -14- 14.2 Manager Indemnity Manager shall indemnify City with respect to any claim, damage or loss arising from the sole negligence, fraud, willful misconduct of Manager or any violation of law by Manager. 14.3 Liability City shall not be liable to Manager for any loss of revenue, any loss of use of the Property or for compensatory damages except for reimbursement for any damage to the Equipment or other personal property owned by Manager that is proximately caused by City. 14.4 Insurance Manager shall maintain, throughout the Initial Term and any Extended Term of this Agreement, general liability insurance coverage in an amount not less than one million dollars ($1,000,000.00) per occurrence and not less than two million dollars ($2,000,000.00) aggregate. The City shall be named as an additional insured and shall be entitled to receive thirty (30) days prior written notice of cancellation. ARTICLE 15 DAMAGE BY FIRE OR CASUALTY City shall have no obligation to repair or restore the Property to its original condition in the event of damage or destruction to the extent of twenty percent (20%) of the then full replacement cost of the Property. In the event City elects to repair or restore the Property, then this Agreement shall continue in full force and effect. In the event City elects not to restore the Property when damage exceeds twenty percent (20%) of the full replacement cost, this Agreement shall terminate. ARTICLE 16 ASSIGNMENT Manager may not assign this Agreement without City's prior written consent, which consent may be withheld in City's sole discretion. Manager may grant or approve any agreement or contract with any individual or entity to promote a Permitted Use or facilitate the operation of the Program. -15- ARTICLE 17.1 17 DEFAULTS, REMEDIES AND TERMINATION Legal Actions In addition to any other rights or remedies, either Party may institute legal action to cure, correct, or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purpose of this Agreement. Any legal action shall be filed in the County of Orange. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 17.2 Occurrence of Default The following acts or omissions shall be considered material breaches of this Agreement if Manager fails to cure the default within thirty (30) days after written notice of default from City or, if cure is not feasible within thirty (30) days, Manager has failed to commence cure within thirty (30) days or fails to diligently proceed to cure: 17.2.1 The failure of Manager to operate the Theatre in compliance with the provisions of this Agreement. 17.2.2 The failure of Manager specified in this Agreement. 17.3 Remedies to maintain the Property as If Manager has materially breached this Agreement then a Default shall be deemed to have occurred, and City may give written notice of termination to Manager, and on the date specified in the notice this Agreement shall terminate. In addition to the right of termination, City shall have the immediate right to reenter the Property and take possession of the Theatre. ARTICLE 18 ENTRY BY CITY City may enter the Property at reasonable times for the purpose of inspecting, servicing or posting notices, protecting the Property or the Theatre, or for any other lawful purposes. City shall use reasonable care to avoid unreasonable interference with the use of the Property during events open to the public. -16- However, nothing in this Agreement shall be considered to alter or impair City's authority to inspect the Property in the course of exercising its police powers such as the enforcement of provisions of the Newport Beach Municipal Code. ARTICLE 19.1 19 MISCELLANEOUS Notices All notices and other communications shall be in writing, shall be sent by first class, registered or certified United States mail, postage prepaid, and shall be deemed to have been given two (2) days after the day of mailing, addressed: (a) if to City: (b) City of Newport Beach Attn: City Manager 3300 Newport Boulevard Newport Beach, CA 92663 if to Manager: Friends of Newport Theatre Arts Center Attention: President 2501 Cliff Drive Newport Beach, CA 92663 19.2 No Claims Against City 19.3 Nothing in this Agreement constitutes any consent or request by City for the performance of any labor or services or the furnishing of any materials to the Property Integration This Agreement represents the entire understanding between the parties, and there are no agreements or representations between the parties except those contained in this Agreement. This -17- Agreement supersedes any prior negotiations, representations, discussions or agreements between the Parties with respect to the Property or the Theatre. Except as otherwise provided, no subsequent change or addition to this Agreement shall be binding unless in writing and signed by the Parties. 19.4 Severability; Consent If a term of this Agreement or any application is declared invalid or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall not be effected. Manager: Dated: Q C, 0-61P/1-eA/\ Rae A. Cohen, President Friends of Newport Theatre Arts Center City of Newport Beach: Gary Adams Mayor of Newport Beach Attest: gip,4,0 7?) x4,4: LaVonne Harkless City Clerk -18- VV\C(A/22 , 2001 Dated: 4•11 -`"7.►,2001 Appr ed as to Form: Robert Burnham City Attorney