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HomeMy WebLinkAbout20 - Amendment to Agreement with VNB for Tourism Promotion, Branding and Marketing Services (TOT)Agenda Item No. 20 January 28, 2014 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/ - APPROVED: TITLE: Amendment to Agreement with Visit Newport Beach, Inc. for Tourism Promotion, Branding and Marketing Services ABSTRACT: Under an agreement with the City of Newport Beach (City), Visit Newport Beach, Inc. (VNB) serves as the Destination Marketing Organization for Newport Beach and annually receives 18 percent of all Transient Occupancy Tax revenue collected by the City to provide tourism promotion, branding and marketing services. The current agreement was approved in September 2011. City staff and VNB representatives have worked on a proposed amendment to the agreement that would extend the term of the agreement, change VNB's budget cycle from annual to bi- annual, and include an annual public benefit funding requirement of $150,000. RECOMMENDATIONS: 1. Authorize the Mayor and City Clerk to execute the amendment to the 2011 agreement between the City of Newport Beach (City) and Visit Newport Beach, Inc. (VNB) in a manner and form substantially similar to the attached document. 2. Provide direction on how the City will use the proposed $150,000 in annual public benefit funding provided for in the amendment to the 2011 agreement. FUNDING REQUIREMENTS: Under an agreement dated September 27, 2011, VNB receives 18 percent (equaled approximately $3.6 million in Fiscal Year 2013) of all Transient Occupancy Tax collected by the City to provide tourism promotion, branding and marketing services for Amendment to Agreement with Visit Newport Beach, Inc. for Tourism Promotion, Branding and Marketing Services January 28, 2014 Page 2 Newport Beach. If the proposed amendment is approved, VNB will contribute $150,000 annually to the City - through the term of the amended agreement - for programs or activities (e.g., public art, cultural and promotional activities, beautification projects, etc.) that benefit the public. DISCUSSION: Visit Newport Beach, Inc. (VNB), a non - profit organization (under IRS code §501 (c)(6)), is the Destination Marketing Organization for Newport Beach. VNB has operated under an agreement with the City that originally dates back to May 2004. That agreement was amended in March 2009. The City and VNB entered a new agreement for tourism promotion, branding and marketing services on September 27, 2011 (Attachment A). The agreement directs VNB to provide specific services to the City and community using transient occupancy tax (TOT) revenues. The current tourism promotion agreement is set to expire on June 30, 2016. The current tourism promotion agreement generally directs VNB to carry out marketing activities and inform prospective tourists and visitors of the city's recreational, cultural, shopping and dining opportunities and hotels. It also calls for the development and implementation of specific marketing programs designed to increase business and visitor trade in Newport Beach. In turn, the agreement directs the City to pay to VNB 18% of all TOT collected by the City each fiscal year. In Fiscal Year 2013, VNB received approximately $3.6 million in TOT revenues. VNB also serves as the owner's association to the Newport Beach Tourism Business Improvement District (NBTBID) under a July 1, 2009 management agreement with the City. VNB administers and implements the NBTBID's sales and marketing programs. In Fiscal Year 2013, VNB oversaw the expenditure of approximately $1.7 million in NBTBID funds. Proposed Amendment VNB has requested an amendment to the current tourism promotion agreement. If approved, the proposed amendment (Attachment B), would accomplish the following: 1. Extend the term of the agreement to expire on December 31, 2024 2. Change VNB's budget cycle from annual to biennial 3. Update the addresses for notice 4. Create an annual public benefit funding requirement of $150,000. If approved, the extended term would more closely align the length of this agreement with the term of the NBTBID (if Council approves the related item on its January 28 agenda). The longer term for the agreement, and moving to a two -year budget cycle, F] Amendment to Agreement with Visit Newport Beach, Inc. Branding for Tourism Promotion, and Marketing Services January 28, 2014 Page 3 would facilitate better short-term and long -range planning for VNB. The proposed public benefit funding is the result of a brief discussion held during the City Council's November 26, 2013 Study Session. VNB proposed providing $150,000 in NBTBID funding annually to the City to use for arts programming. However, after further researching the restrictions placed upon the expenditure of TBID funding, staff and VNB representatives instead agreed to propose that the $150,000 be drawn from the TOT revenue provided to VNB. The proposed amendment also calls for the funding to be used "on programs or activities (e.g., public art, cultural and promotional activities, beautification projects, etc.) that benefit the public, as determined by the City Council." Staff left this language discretionary, understanding that the Council may wish to discuss and determine a specific use during its January 28 meeting. At a recent City Council meeting, Council Member Henn asked that the $150,000 /year go toward arts and cultural programming across the city, supporting events and ongoing programs as opposed to structures or art pieces or facilities. Mayor Pro Tern Selich suggested that the $150,000 /year be reserved so that the City could support lower -cost overnight coastal accommodations, reflecting a perceived trend at the California Coastal Commission level to deny projects (such as a proposed replacement of Beach Plaza Hotel in Long Beach) that result in lower -rent hotel rooms being replaced by higher -rent rooms. Finally, the last item to note in the proposed amendment involves a change to the VNB's address and the City's address since both organizations have moved their office locations since the agreement was entered into. Related Items on the January 28, 2014 Council Agenda For clarification purposes, there are three other VNB - related items on the City Council's January 28 agenda. The three items involve the NBTBID: • Item #12 pertains to the modification of the NBTBID's Management District Plan. • Item #13 pertains to the renewal of the NBTBID. • Item #21 pertains to a proposed amendment to the City's 2009 agreement with VNB for NBTBID management. 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 Amendment to Agreement with Visit Newport Beach, Inc. for Tourism Promotion, Branding and Marketing Services January 28, 2014 Page 4 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. NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). Submitted by: (ZAZ24�- - Tara Finnigan Public Information Manager Attachments: A. September 27, 2011 Agreement Between the City and VNB for Tourism Promotion, Branding and Marketing Services B. Amendment No. One to City — VNB Agreement for Tourism Promotion, Branding and Marketing Services a Attachment A AGREEMENT BETWEEN THE CITY OF NEWPORT BEACH AND VISIT NEWPORT BEACH INC. FOR v TOURISM PROMOTION, BRANDING, AND MARKETING SERVICES I C � • THIS TOURISM PROMOTION, BRANDING, AND MARKETING AGREEMENT ( "Agreement"), is made and entered into on this 270 day September, 2011 ( "Effective Date "), by and between the City of Newport Beach, a California municipal corporation and charter city ( "City") and Visit Newport Beach Inc., a California nonprofit corporation and an IRC 501(c)(6) destination marketing organization ( "VNB "). City and VNB are at times individually referred to herein as "Party" and collectively as "Parties." RECITALS A. City is. a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the City's Charter. B. VNB is a 501(c)(6) marketing organization whose mission is to partner with the City and the "tourism and hospitality industry by protecting and promoting the City's brand and to deliver additional spending by leisure and conference visitors, leading to enhanced community economic vitality and quality of life. C. VNB serves as the owners' association to the City's Tourism Business Improvement District's pursuant to an agreement between the City and the VNB dated July 1, 2009. D. City and VNB operate under a May 12, 2004 agreement ( "Original Agreement ") whereby the VNB receives a portion of the City's transient occupancy tax ( "TOT ") to fund marketing efforts and the promotion of tourism within the City. E. City and VNB amended the Original Agreement on March 10, 2009 to extend its term and revise Recital "B" to clarify the taxes that comprise TOT under the Original Agreement. F. City and VNB desire to terminate the Original Agreement, as amended, in its entirety and replace it with this Agreement. NOW, THEREFORE, it is mutually agreed by and between the Parties as follows: I AGREEMENT 1. INCORPORATION OF RECITALS The Recitals provided above are true and correct and incorporated into the operative part of this Agreement. 2. TERMINATION OF ORIGINAL AGREEMENT Notwithstanding the termination language provided in Section 10 of the Original Agreement, the Original Agreement and any amendments thereto shall be terminated and of no further effect upon the execution of this Agreement by the Parties. 3. TERM This Agreement shall be effective on the date first written above, the Effective Date, and shall terminate on June 30, 2016, unless terminated earlier as provided herein. 4. SCOPE OF SERVICES At a minimum and in a manner consistent with standard practices in the tourism and hospitality industry ( "Standard Practices ") VNB shall develop, plan, carry out, and supervise a program to market and promote the Newport Beach brand and to promote tourism in, and serve the needs of, visitors to Newport Beach as well as increase the amount of TOT collected through their promotional activities ( "Services "). Subject to the foregoing sentence, the Services shall, at a minimum, include the following: a) The maintenance of suitable office space and the employment of competent personnel to properly carry out promotional, branding, and marketing duties; b) The preparation of brochures, publications, guides, on -line promotions, social networking efforts, and other marketing materials and information that inform prospective tourists and visitors of the recreational activities, cultural assets, shopping and dining opportunities, night -time stay opportunities, and natural beauty of Newport Beach. c) The dissemination of information described in this section by way of the media, direct mail, handouts, social networking, websites, smart phone applications, or other means of distribution; and d) The development and implementation of specific marketing programs designed to increase awareness of the Newport Beach brand and to increase business and visitor trade in Newport Beach; and 2 3 e) Any additional Services when proposed by the City which are consistent with the promotion of tourism and the Newport Beach brand which are mutually agreeable and acceptable to the Parties. 5. TIME OF PERFORMANCE Time is of the essence in the performance of this Agreement by both Parties, and VNB shall perform all Services to completion in a diligent and timely manner. 6. REPORTS TO THE CITY In accordance with the Standard Practices, the following reports shall be submitted by VNB to the City within the time frame set forth below. The reports shall be subject to review. and approval or modification by the City where noted below: a) Performance Standards Report. In time for presentation to the City Council by the City Council's second meeting in July of each year, VNB shall annually set and update performance standards ( "Performance Standards ") that correspond with VNB's approved goals, as set by the VNB's Board of Directors ( "Board "). The City Council shall review this report. b) Annual Marketing Plan. In time for presentation to the City Council by the City Council's second meeting in July of each year, VNB shall annually prepare and its Board shall adopt an Annual Marketing Plan describing its marketing and branding effort for the upcoming fiscal year. The City Council shall review this report. c) Budget. In time for presentation to the City Council by the City Council's second meeting in July of each year, VNB shall annually prepare and its Board shall adopt an annual budget for the twelve (12) month fiscal year that begins each July 1. The budget shall describe the revenues and expenditures required to meet the Performance Standards and Annual Marketing Plan obligations. The City Council shall review the budget and approve and /or modify and approve the budget. Once the annual budget is approved by the City Council, the City Council shall review and approve or deny any proposed budget amendments that increase VNB's "fixed operating costs" by One - Hundred Thousand Dollars ($100,000) or more in any one (1) year. "Fixed operating costs" is defined as any expenditure, other than a one- time expenditure, that commits VNB to an on -going fiscal obligation. d) Audited Financial Statements, By September 30`h of each year, VNB shall submit to the City audited. financial statements for its most recently ended fiscal year, including any management letter associated with the audited financial statements. The City Council shall review the audited financial statements and management letter. 3 e) Expenditure Report. By September 30'" of each year, VNB shall submit an expenditure report which shall be certified by VNB and a Certified Public Accountant to the effect that the funds received pursuant to this Agreement were expended in accordance with this Agreement in the previous fiscal year for purposes- authorized by this Agreement. This report shall include reasonable detail in support of the certification, including expenditures for or contributions to special events and not - for - profit organizations in Newport Beach. 7. INTERNAL PROCESSES AND CONTROLS In accordance with Standard Practices, the Board shall adopt and enforce internal policies and controls, including but not limited to: a) Requests for Proposals for outside consultant services, including marketing and independent auditing firms; b) Travel and entertainment expense authorization and reimbursement, including international travel; c) Conflict of interest procedures that are applicable to VNB staff as well as Board members in accordance with Internal Revenue Service practices; and d) Use of external consultants for determination of compensation of executive staff, as well as the establishment and evaluation of performance standards for determining payment of incentive compensation, and other non -salary compensation. B. COMPENSATION a) City shall pay VNB eighteen percent (18 %) of the annual total TOT collected by City ( "Payment ", "funds" or "City funds provided under this Agreement "). For the purposes of this Agreement, TOT shall only include the tax collected under City Municipal Code Chapters 3.16 and 3.28 and shall not include any other tax, fee, or assessment including, but not limited to, any fee paid to the City for the right to develop timeshares. The Payment shall be electronically distributed to VNB on a monthly basis on the twentieth (201") day of each month during the term of this Agreement. b) Subject to the limitations set forth in this Section 8(b), City shall have the right, in its sole discretion, to adjust the Payment (increase or decrease the percentage of TOT paid to VNB) for any reason after notice to VNB and an opportunity for VNB to formally comment on the adjustment. If the City adjusts the Payment, it shall do so as a part of the City's once - annual budget adoption process. 4 8 9. RIGHT TO AUDIT City reserves the right to designate its own employee representative(s) or its contracted representatives with a Certified Public Accounting firm who shall have the right to audit VNB's accounting procedures and internal controls of VNB's financial systems 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, not more than once per year. City will make every attempt to finish audit timely and VNB agrees to submit all records requested by City or its representative(s) in a timely manner. VNB 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 Payment tendered under this Agreement. VNB agrees to retain all necessary records /documentation for the entire length of this audit period, and to provide, upon prior notice to VNB, access to VNB's auditors for this purpose. The City will notify VNB in writing of any exception taken as a result of an audit. If VNB disagrees with any such exceptions, VNB will notify City in writing within twenty (20) days after the notification of exceptions to VNB. VNB and the City Manager or his /her designee will then meet and attempt to resolve any discrepancies. VNB will be provided an opportunity to include its written responses to audit exception items in the final report of the audit. Any expenditure of funds for a purpose not authorized by this Agreement shall be paid to City by VNB within thirty (30) days from presentation of City's findings to VNB. If VNB fails to make such payment, VNB agrees to pay interest, accruing monthly, at a rate of ten percent (10 %) per annum. Interest will be computed from the date of written notification of exception(s) to the date VNB reimburses City for any exception(s). 10. VNB GOVERNANCE The City Council shall appoint, at its sole discretion, one (1) person with experience in matters of board governance, preferably either directly or indirectly in the tourism or hospitality industry, to serve as-a full voting member of the VNB's Executive Committee. The City Council shall consult in advance with VNB on candidates for this appointment. The City Manager or his /her designee shall serve as an ex- officio non- voting member of the VNB's Board of Directors. VNB agrees that, except for any portion of the meeting relating to confidential personnel matters, the City Manager or his or her designee may attend but not vote at Executive Committee meetings. VNB shall notify the City Manager and the City's board appointee of any and all meetings of the Board of Directors and Executive Committee not less than 72 hours before each meeting. 0 �t 11. ASSIGNABILITY VNB shall not assign or otherwise transfer any of its rights or obligations whatsoever in this Agreement without the prior written consent of City acting by and through the City Manager. 12. COPYRIGHTS If this Agreement results in any publication, in any form, which may be copyrighted, the author is free to copyright the work, but City reserves a royalty -free nonexclusive and irrevocable license to reproduce, publish or otherwise use and may authorize others to use such materials for use in connection with official City programs or activities; provided, however, that the. City shall be bound by and responsible for the payment of any contracts VNB may have entered into, at City's direction, regarding copyrighted material. 13. OFFICE SPACE VNB shall maintain office space within the City's corporate boundaries. 14. INDEMNIFICATION To the fullest extent permitted by law, VNB 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, attorneys' 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 the negligence, recklessness, or misconduct of the VNB or its principals, officers, agents, employees, vendors, suppliers, subconsultants, 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 VNB to indemnify the Indemnified Parties from any Claim arising from the sole negligence, active 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 regaiYdless 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 VNB. 0 10 15. NO WAIVER OF RIGHTS 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. 16. INSURANCE Without limiting VNB's indemnification of City, and prior to commencement of Services, VNB shall obtain, provide and maintain at its own expense during the term of this Agreement, policies of insurance of the type and amounts in a form satisfactory to City. 17. NOTICES Any notice, demand, request, consent, approval, or communication that either Party desires or is required to give to the other Party or to any other person shall be in writing and either served personally or sent by pre -paid, first -class mail. Any notice, demand, request, consent, approval, or communication that either Party desires or is required to give to the other Party shall be addressed as follows: If to VNB: Visit Newport Beach Inc. Attn: President & CEO 1200 Newport Center Drive, Suite 120 Newport Beach, CA 92660 -6904 After November 14, 2011: Visit Newport Beach Inc. Attn: President & CEO 1600 Newport Center Drive, Suite 120 Newport Beach, California 92660 -6210 If to City: City of Newport Beach Attn: City Manager 3300 Newport Blvd. P.O. Box 1768 Newport Beach, CA 92658 -8915 With a cc to: City of Newport Beach Attn: Finance Director 3300 Newport Blvd. P.O. Box 1768 Newport Beach, CA 92658 -8915 7 11 Either Party may change its address by notifying the other Party of the change of address. Notice shall be deemed given within three (3) days after the date of mailing, if mailed as provided in this Section. 18. CONFLICTS OF INTEREST VNB or its employees may or may not be subject to the provisions of the California Political Reform Act of 1974 ( "Act") which (among other provisions): (1) requires public officials to disclose any financial interest that may foreseeably be materially affected by the Services performed under this Agreement; and (2) prohibits public officials from making, or participating in making, decisions that will foreseeably financially affect such interest. If subject to the Act, VNB shall conform to applicable requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. VNB shall indemnify and hold harmless City for any and all claims for damages resulting from VNB's violation of this Section. Upon request of the City, VNB shall provide all approved conflict of interest forms to the City that are required under the Act. 19. CLAIMS VNB and City expressly agree that"in addition to any claims filing requirements set forth in this Agreement, VNB shall be required to file any claim VNB may have against the City in strict conformance with the Tort Claims Act (Government Code Sections 900 et seq.). 20. TERMINATION In the event that either Party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that Party shall be deemed in default in the performance of this Agreement. If such default is not cured within a period of fourteen (14) calendar days, or if more than fourteen (14) calendar days are reasonably required to cure the default and the defaulting Party fails to give adequate assurance of due performance within fourteen (14) calendar days after receipt of written notice. of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non - defaulting Party may terminate the Agreement forthwith by giving to the defaulting Party written notice thereof. Notwithstanding the above provisions, City shall have the right, at its sole discretion and without cause, of terminating this Agreement at any time by giving one year's (365 calendar days) prior written notice to VNB. The written notice of termination without cause must be authorized by the City Council at a regular or special meeting. U 12 21. INDEPENDENT CONTRACTOR It is understood that City retains VNB on an independent contractor basis and VNB is not an agent or employee of City. The manner and means of conducting the Services are under the control of VNB, 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 VNB or any of VNB's employees or agents, to be the agents or employees of City. VNB shall have the responsibility for and control over the means of performing the Services, provided that VNB is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct VNB as to the details of the performance or to exercise a measure of control over VN8 shall mean only that VNB shall follow the desires of City with respect to the results of the Services. 22. STANDARD PROVISIONS a) Compliance With all Laws VNB 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. In addition, all Services performed by VNB shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements. b) Integrated Agreement 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. c) Conflicts or Inconsistencies In the event there are any conflicts or inconsistencies between this Agreement and any attachments attached hereto, the terms of this Agreement shall govern. d) 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. e) Amendments This Agreement may be modified or amended only by a written document executed by both VNB and City and approved as to form by the City Attorney. 0 13 f) 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. g) 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. h) Equal Opportunity Employment VNB 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, sexual orientation or age. i) No Attorney's Fees In the event of any dispute or legal action arising under this Agreement, the prevailing Party shall not be entitled to attorneys' fees. j) Counterparts This Agreement may be executed in two (2) or more counterparts, each of which shall. be deemed an original and all of which together shall constitute one (1) and• the same instrument, k) Good Faith, Due Diligence, and Fair Dealing VNB and the City of Newport Beach shall exercise good faith, due diligence, and fair dealing toward one another in carrying out the terms of this Agreement. Rev 082511 (SIGNATURES ON FOLLOWING PAGE] `[I 14 IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed on the dates hereinafter respectively set forth. CITY OF NVWPORT B • CH, a Californi4 myinicipal 1prporation Date: A Date: lb./s)lt APPROVED AS TO FORM: CITY ATTOR OFFICE By o� Aaron arp City Attorney Date 9/2$ // Mayor Leilani Brown City Clerk VISIT NEWPORT BEACH INC., a Califojnia,nonprofit corporation and an BYlwkt�, Printed Name Title LAS /��- [END OF SIGNATURES] 11 n 15 Agenda Item No. 10 September 27, 2011 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Manager's Office Dave Kiff, City Manager —� 949 -644 -3001, dkiff @newportbeachca.gov PREPARED6Y: Dave Kiff, City Manager APPROVED: l TfR.E: Agreement with Visit Newport Beach, Inc. for Destination Marketing Services Visit Newport Beach, Inc. is the Destination Marketing Organization for Newport Beach. The City and the Visit Newport Beach executive board have worked on an updated agreement reflecting, among other things, an increased presence for the City's representative on the executive board, some administrative improvements, as well as extending the term of the agreement out two more years, to 2016. Ik .�� -�• �„ Authorize the Mayor and City Clerk to execute the attached agreement between the City and Visit Newport Beach, Inc. in a manner and form substantially similar to the attached document. 2. Authorize the City Clerk to seek applications for the City's appointment to the VNB Executive Board. FUNDING REWFENIENTS: There is no fiscal impact related to this specific agreement, although we note that Visit Newport Beach, Inc. receives about $2.7 million per year in transient occupancy taxes (also known as hotel bed taxes) to provide destination marketing services for Newport Beach. 16 Agreement with Visit Newport Beach, Inc. for Destination Marketing Services September 27, 2011 Page 2 Diq'.t Visit Newport Beach, Inc. ( "VNB "), a non - profit organization (under IRS code §501(c)(6)), is the Destination Marketing Organization ( "DMO ") for Newport Beach (DMOs were previously referred to as conference and visitors bureaus). VNB has an Agreement with the City dating back to May 12, 2004 and as amended March '10, 2009 ( "Current Agreement ") that directs VNB to provide specific services to the City and community using transient occupancy tax ( "TOT ") revenues. The Current Agreement is set to expire June 30, 2014. The Current Agreement generally directs that VNB should maintain suitable quarters and employ competent personnel to carry out its promotional activities, inform prospective tourists and visitors of the recreational, cultural, shopping and dining opportunities offered in the City, and develop and implement specific marketing programs designed to increase business and visitor trade in the City. In turn, the Current Agreement directs the City to pay to VNB 18% of all TOT collected. In the past 3 years, the.City has paid $7,667,510 to VNB. In Fiscal Year 2010 -11, VNB received about $2.7 million in TOT. VNB also serves as the owner's association to the City's Tourism Business Improvement District ( "T- BID ") under a July 1, 2009 management agreement with the City. In this capacity the VNB is charged with administering and implementing the T- BID's activities and improvements. In Fiscal Year 2010 -11, VNB oversaw the expenditure of about $1.3 million in T -BID funds. VNB's governance includes two related boards • a 25- member Board of Directors (currently, the City Manager is a non - voting member and the Library Director is a voting member); and • a 7- member Executive Board. The Current Agreement sets forth a number of .reports that VNB must send to the City on an annual basis —these include: • A Marketing Plan and Budget (budget must be approved by City .Council); • A report on the previous fiscal year's activities; and • An annual independent audit. In addition, the City has ability to conduct a .compliance review once each year. The Current Agreement can be terminated for cause for improper expenditures, failure to perform, and bankruptcy or other insolvency. It can be terminated without cause with a years' notice to.either party. The Current Agreement is AttachmentA, 17 1 Agreement with Visit Newport Beach, Inc. for Destination Marketing Services September 27, 2011 Page 3 A recent compliance review by the City's internal auditor, found VNB to be in good compliance with the terms of the Agreement. The internal auditor did identify some possible improvements to the City's partnership with VNB, and VNB has been open to those improvements along with suggesting that the partnership's term be extended by an additional two (2) years to June 30, 2016. The proposed improvements are: Include a City Council appointee on the VNB Executive Board; • Direct VNB to modernize, adopt, and follow policies (their own policies —not policies specifically directed or written by the City) regarding requests for proposals, travel and entertainment, and more; • Have the City review and approve any increases in the adopted VNB budget that would increase VNB's fixed operational costs by $100,000 or more; • A clarification of the City's ability to review VNB's compliance with the agreement; A stronger description of what documents should be reviewed by the City Council and when VNB should provide them to the Council, including the: o Performance Standards Report; • Annual Marketing Plan; • Budget; • Audited Financial Statements (including any management letter); and • Expenditure Report. VNB President and CEO Gary Sherwin and I presented this information to the City Council and public at a Study .Session held July 12, 2011. Readers can review the presentation by going on the City's website. The proposed agreement generally reflects that discussion. The proposed agreement is included as Attachment B. Staff has met with representatives of VNB and they believe that the proposed agreement appropriately characterizes our staff -level discussions. . Staff recommends the City Council find this action is not subject to the California Environmental Quality Act ( "CEQK) 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. 18 3 Agreement with Visit Newport Beach, Inc. for Destination Marketing Services September27, 2011 Page 4 The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). Submitted by: Dave iff City Manager Attachment: A. Current Agreement B. Proposed Agreement 19 H Attachment A Will zil�i�ill,�1.4l'ille)lAIO�ml.i.Lioipillil.'�cy.,�l�[Divir-ii.,�,qw THIS TOURISM PROMOTION, BRANDING, AND MARKETING AGREEMENT ( "Agreement"), is made and entered into on this — day , 2011 ( "Effective Date'), by and between the City of Newport Beach, a California municipal corporation and charter city ( "City") and Visit Newport Beach Inc., a California nonprofit corporation and an IRC 501(c)(6) destination marketing organization ( "VNB "). City and VNB are at times individually referred to herein as "Party" and collectively as "Parties." .f A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the City's Charter. B. VNB is a 501(c)(6) marketing organization whose mission is to partner with the City and the tourism and hospitality industry by protecting and promoting the City's brand and to deliver additional spending by leisure and conference visitors, leading to enhanced community economic vitality and quality of life. C. . VNB serves as the owners' association to the City's Tourism Business Improvement District's pursuant to an agreement between the City and the VNB dated July 1, 2009. D. City and VNB operate under a May 12, 2004 agreement ( "Original Agreement ") whereby the VNB receives a portion of the City's transient occupancy tax ( "TOT ") to fund marketing efforts and the promotion of tourism within the City. E. City and VNB amended the Original Agreement on March 10, 2009 to extend its term and revise Recital "B" 'to clarify the taxes that comprise TOT under the Original Agreement. F. City and VNB desire to terminate the Original Agreement, as amended, in its entirety and replace it with this Agreement. NOW, THEFEFCRE, it is mutually agreed by and between the Parties as follows: 20 5 RY*g,: ;L4g _ Icy,, o; a :f_s7LIf.9 The Recitals provided above are true and correct and incorporated into the operative part of this Agreement. 2. TERMINATION OFORiGKALAGFU13VENT Notwithstanding the termination language provided in Section 1.0 of the Original Agreement, the Original Agreement and any amendments thereto shall be terminated and of no further effect upon the execution of this Agreement by the Parties. This Agreement shall be effective on the date first written above, the Effective Date, and shall terminate on June 30, 2016, unless terminated earlier as provided herein. At a minimum and in a manner consistent with standard practices in the tourism and hospitality industry ( "Standard Practices ") VNB shall develop, plan, carry out, and supervise, a program to market and promote the Newport Beach brand and to promote tourism in, and serve the needs of, visitors to Newport Beach as well as increase-the amount of TOT collected through their promotional activities ( "Services "). Subject to the foregoing sentence, the Services .shall, at a minimum, include the following; a) The maintenance of .suitable office space and the employment of competent personnel to properly carry out promotional, branding, and marketing duties; b) The preparation of brochures, publications, guides, on -line promotions, social networking efforts, and other marketing materials and information that inform prospective tourists and visitors of the recreational activities, cultural assets, shopping and dining opportunities, night -time stay opportunities, and natural beauty of Newport Beach. c) The dissemination of information described in, this section by way of the media, direct mail, handouts, social networking, websites, smart phone applications, or other means of distribution; and d) The development and implementation :of specific marketing programs designed to increase awareness of the Newport Beach brand and to increase business and visitor trade in Newport Beach; and 21 6 e) Any additional Services when proposed by the City which are consistent with the promotion of tourism and the Newport Beach brand which are mutually agreeable and acceptable to the Parties. Time is of the essence in the performance of this Agreement by both Parties, and VNB shall perform all Services to completion in a diligent and timely manner. In accordance with the Standard Practices, the following reports shall be submitted by VNB to the City within the time frame set forth below. The reports shall be subject to review and approval or modification by the City where noted below: a) Performance Standards Report. In time for presentation to the City Council by the City Council's second meeting in July of each year, VNB shall annually set and update performance standards ( "Performance Standards ") that correspond with VNB's approved goals, as set by the VNB's Board of Directors ( "Board "). The City Council shall review this report. b) Annual Marketing Plan. In time for presentation to the City Council by the City Council's second meeting in July of each year, VNB shall annually prepare and its Board shall adopt an Annual Marketing Plan describing its marketing and branding effort for the upcoming fiscal year. The City Council shall review this report. c) Budget. In time for presentation to the City Council by the City Council's second meeting in July of each year, VNB shall annually prepare and its Board shall adopt an annual budget for the twelve (12) month fiscal year that begins each July 1. The budget shall describe the revenues and expenditures required to meet the Performance Standards and Annual Marketing Plan obligations. The City Council shall review the budget and approve and/or modify and approve the budget. Once the annual budget is approved by the City Council, the City Council shall review and approve or deny any proposed budget amendments that increase VNB's "fixed operating costs" by One - Hundred Thousand Dollars ($100,000) or more in any (1) year. "Fixed operating costs' is defined as any expenditure, other than a one- time expenditure, that commits VNB to an on -going fiscal obligation. d) Audited Financial Statements. By September 30th of each year, VNB shall submit to the City audited financial statements for its. most recently ended fiscal year, including any management letter associated with the audited financial statements. The City Council shall review the audited financial statements and management letter. 3 �i7 e) Expenditure Report. By September 30th of each year, VNB shall submit an expenditure report which shall .be certified by VNB and a Certified Public Accountant to the effect that the funds received pursuant to this Agreement were expended in accordance with this Agreement in the previous fiscal year for purposes authorized by this Agreement. This report shall include reasonable detail in support of the certification, including expenditures for or contributions to special events and not - for -profit organizations in Newport Beach. In accordance. with Standard Practices, the Board shall adopt and enforce internal policies and controls, including but not limited to: a) Requests for Proposals for outside consultant services, including marketing and independent audifing firms; b) Travel and entertainment expense authorization and reimbursement, including international travel; c) Conflict of interest procedures that are .applicable to VNB staff as well as Board members in accordance with Internal Revenue Service practices; and d) Use of external consultants for determination of compensation of executive staff, as well as the establishment and evaluation of performance standards for determining payment of incentive compensation, and other non -salary compensation. a) City shall pay VNB eighteen percent (18 %) of the annual total TOT collected by City ( "Payment', "funds" or "City funds provided under this Agreement'). For the purposes of this Agreement, TOT shall only include the tax collected under City Municipal Code Chapters 3.16 and 3.28 and shall not include any other tax, fee, or assessment including, but not limited 'to, any fee paid to the City for the right to develop timeshares. The Payment shall be electronically distributed to VNB on a monthly basis on the twentieth (20th) day of each month during the term of this Agreement. b) Subject to the limitations set forth in this Section 8(b), City shall have the right, in its sole discretion, to adjust the Payment (increase or decrease the percentage of TOT paid to VNB) for any reason after notice to VNB and an opportunity for VNB to formally comment on the adjustment. If the City adjusts the Payment, it shall do so as a part of the City's once- annual budget adoption process. rd I N i * T_�j City reserves the right to designate its own employee representative(s) or its contracted representatives with a Certified Public Accounting firm who shall have the right to audit VNB's accounting procedures and internal controls of VNB's financial systems 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, not more than once per year. City will make every attempt to finish audit timely and VNB agrees to submit all records requested by City or its representative(s) in a timely manner. VNB 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 Payment tendered under this Agreement. VNB agrees to retain all necessary records /documentation for the entire length of this audit period, and to provide, upon prior notice to VNB,'access to VNB's auditors, for this purpose. The City will notify VNB in writing of any exception taken as a result of an audit. If VNB disagrees with any such exceptions, VNB will notify City in writing within twenty (20) days after the notification of exceptions to VNB. VNB and the City Manager or his /her designee will then meet and attempt to resolve any discrepancies. VNB will be provided an opportunity to include its written responses to audit exception items in the final report of the audit. Any expenditure of funds for a purpose not authorized by this Agreement shall be paid to City by VNB within thirty (30) days from presentation of City's findings to VNB. If VNB fails to make such payment, VNB agrees to pay interest, accruing monthly, at a rate of ten percent (10 %) per annum. Interest will be computed from the, date of written notification of exception(s) to the date VNB reimburses City for any exception(s). 10. VNB GOVERNANCE The City Council shall appoint, at its, sole discretion, one (1) person with in matters of board governance, preferably either directly or indirectly in the tourism or hospitality industry, to serve as a full voting member of the VNB's Executive Committee. The City Council shall consult in advance with VNB on candidates for this appointment. The City Manager or his /her designee shall serve as an ex- officio non - voting member of the VNB's Board of Directors. VNB agrees that, except for any portion of the meeting relating to confidential personnel matters, the City Manager or his or her designee may attend but not vote at Executive Committee meetings. VNB shall notify the City Manager and the City s board appointee of any and all meetings of the Board of Directors and Executive Committee not less than 72 hours before each meeting. 24 I f i lIIIIIIIEU-'?"A'K! :11 1 11'1 VNB shall not assign or otherwise transfer any of its rights or obligations whatsoever in this Agreement without the prior written consent of City acting by and through the City Manager. If this Agreement results in any publication, in any form, which may be copyrighted, the author is free to copyright the work, but -City reserves a royalty -free nonexclusive and irrevocable license to reproduce, publish or otherwise use and may authorize others to use such materials for use in connection with official City programs or activities; provided, however, that the City shall be bound by and responsible for the payment of any contracts VNB may have entered into, at City's direction, regarding copyrighted material. fiFinsto: i ;A:K:7_1X VNB shall maintain office space within the City's corporate boundaries. 14. INDEIVINIFICATM To the fullest extent permitted by law, VNB 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, attorneys' 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 the negligence, recklessness, or misconduct of the VNB or its principals, officers, agents, employees, vendors, suppliers, subconsultants, 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 VNB to indemnify the Indemnified Parties from any Claim arising from the sole negligence, active 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 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 VNB. 11 25 10 15. NO WAIVER OF RIGHTS 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. Without limiting VNB's indemnification of City, and prior to commencement of Services, VNB shall obtain, provide and maintain at its own expense during the term of this Agreement, policies of insurance of the type and amounts in a form satisfactory to City. 17. NOTICES Any notice, demand, request, consent, approval, or communication that either Party desires or is required to give to the other Party or to any other person shall be in writing and either served personally or sent by pre -paid, first -class mail. Any notice, demand,. request, consent, approval, or communication that either Party desires or is required to give to the other Party shall be addressed as follows: If to VNB: Visit Newport Beach Inc. Attn: President & CEO 1200 Newport Center Drive, Suite 120 Newport Beach, CA 92660 -6904 After November 14, 2011: Visit Newport Beach Inc. Attn: President & CEO 1600 Newport Center Drive, Suite 120 Newpori Beach, California 92660 -6210 If to City: City of Newport Beach Attn: City Manager 3300 Newport Blvd. P.O. Box 1768 Newport Beach, CA 92658 -8915 With a cc to: City of Newport Beach Attn: Finance Director 3300 Newport Blvd. P.O. Box 1768 Newport Beach, CA 92658 -8915 tl 9 Either Party may change its address by notifying the other Party of the change of address. Notice shall be deemed given within three (3) days after the date of mailing, if mailed as provided in this Section. 18. OONFLMOF INTEFEST VNB or its employees may or may not be subject to the provisions of the California Political Reform Act of 1974 ( "Act ") which (among other provisions): (1) requires public officials to disclose any financial interest that may foreseeably be materially affected by the Services performed under this Agreement; and (2) prohibits public officials from making, or participating in making, decisions that will foreseeably financially affect such interest. If subject to the Act, VNB shall conform to applicable requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. VNB shall indemnify and hold harmless City for any and all claims for damages resulting from VNB's violation of this Section. Upon request of the City, VNB shall provide all approved conflict of interest forms to the City that are required under the Act. 19. CLAIMS VNB and City expressly agree that in addition to any claims filing requirements set forth in this Agreement, VNB shall be required to file any claim VNB may have against the City. in strict conformance with the Tort Claims Act (Government Code Sections 900 et seq.). 20. TERMINATION In the event that either Party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that Party shall be deemed in default in the performance of this Agreement. If such default is not cured within a period of fourteen (14) calendar days, or if more than fourteen (14) calendar days are reasonably required to cure the default and the defaulting Party fails to give adequate assurance of due performance within fourteen (14) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non - defaulting Party may terminate the Agreement forthwith by giving to the defaulting Party written notice thereof. Notwithstanding the above provisions, City shall have- the right, at its sole discretion and without cause, of terminating this Agreement at any time by giving one year's (365 calendar days) prior written notice to VNB. The written notice of termination without cause must be authorized by the City Council at a regular or special meeting. H 261 It is understood that City retains VNB on an independent contractor basis and VNB is not an agent or employee of City. The manner and means of conducting the Services are under the control of VNB, 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 VNB or any of VNB's employees or agents, to be the agents or employees of City. VNB shall have the responsibility for and control over the means of performing the Services, provided that VNB is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct VNB as to the details of the performance or to exercise a measure of control over VNB shall mean only that VNB shall follow the desires of City with respect to the results of the Services" 22. STANDARD PROVISIONS a) Compliance With.all Laws VNB 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. In addition, all Services performed by VNB shall conform to applicable City; county, state and federal laws, rules, regulations and permit requirements. b) Integrated Agreement 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. c) Conflicts or inconsistencies In the event there are any conflicts or inconsistencies between this Agreement and any attachments attached hereto, the terms of this Agreement shall govern. d) 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 of any other rule of construction which might otherwise apply. e) Amendments This Agreement may be modified or amended only by a written document executed by both VNB and City and approved as to form by the City Attorney. 7 28 15- f) .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. g) 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. h) Equal-Opportunity Employment VNB 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, sexual orientation or age. i) No Attorney's Fees In the event of any dispute or legal action arising under this Agreement, the prevailing Party shall not be entitled to attorneys' fees. j) Counterparts This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original and all of which together shall constitute one (1) and the same instrument. k) Good Faith, Due Diligence, and Fair Dealing VNB and the City of Newport Beach shall exercise good faith, due diligence, and fair dealing toward one another in carrying out the terms of this Agreement. Rev 082511' 10 29 1 H IN WITNESS VVtEREOF, the Parties hereto have caused this Agreement to be executed on the dates hereinafter respectively set forth. Date: Date: APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE By Aaron Harp City Attorney CITY OF NEWPORT BEACH, a California municipal corporation Michael F. Henn Mayor ATTEST: Leilani Brown City Clerk VISIT NEWPORT BEACH INC., a California nonprofit corporation and an IRC 501(c)(6) marketing organization Printed Title Printed S = 11 30 15 • Attachment B M FIRST AMENDMENT TO AGREEMENT BETWEEN CITY OF NEWPORT BEACH AND THE NEWPORT BEACH CONFERENCE A VISITORS BUREAU U This first amendment to agreement is entered into this 10" day of March 2009, by and between the City of Newport Beach, a municipal corporation and charter city ("City). and the Newport Beach Conference 8 Visitors Bureau, a non - profit corporation organized and existing under and by virtue of the laws of the Stale of California ( "Bureau "), with reference to the following facts: RECITALS A. On May 12, 2004, City entered into an agreement (the ,'Agreement') with the Bureau in which the Bureau would promote tourism in the Oty and the City would pay Bureau 18% of the Transient Occupancy Tax and Visitor's Service Fee collected. B. The Agreement currently expires on June 30, 2009, with two (2) additional one (1) year renewal options. C. City and Bureau desire to amend the Agreement to extend the terms of the Agreement to June 30, 2014. Now therefore, City and Bureau hereby agree as follows: Tenn. Section 1 of the Agreement is hereby deleted in its entirety and replaced with the following: This Agreement shall commence on the 1" day of March, 2004 and shall continue through June 30, 2014, unless terminated earlier as provided herein.' 2. Recital B of the Agreement is hereby deleted In Its entirely and replaced with the following: The City has adopted Chapter 3.16 of the Newport Beach Municipal Code ('.Code ") that authorizes the imposition and co)lection of "Transient Occupancy Tait' as well as Chapter 3.28 of the Code that authorizes the collection of a 'Visitors Service Fee.' For purposes of this AGREEMENT, the term 'Tax Collected" shall, only include the amount of Transient Occupancy Tax. and Visitor's Service Fee actually collected by the City pursuant to Chapters 3.16 and 3.28 of the Code and shall not include any other tax, fee or assessment including, but not limited to, any fee paid to the City for the right to develop timeshares as required by Chapters 15.45 and 20.84. 3. Except as expressly modified herein, all other provisions, terms, covenants and conditions of the Agreement shall remain unchanged and in full force and.eHect. 31 1� ,J IN WITNESS WHEREOF, the parties hereto have executed this AMENDMENT NO. I on. the date, first written above. APPROVED AS TO FORM: cl%' C_ ---� c- ity Attorney for-the City of Newport Beach ATTEST: By: X• 610-� Leilani Brown, City Cleric for-the City of Newport Beach NEWPORT BEACH CONFERENCE AND VISITOR Title: We .lick Print Name: e9 1 r\ Title: C my6fler Print Name: ft la g tn. & 4 32 l9 Attachment B AMENDMENT NO. ONE TO AGREEMENT BETWEEN THE CITY OF NEWPORT BEACH AND VISIT NEWPORT BEACH, INC. FOR TOURISM PROMOTION, BRANDING AND MARKETING SERVICES THIS AMENDMENT NO. ONE TO TOURISM PROMOTION, BRANDING AND MARKETING SERVICES AGREEMENT ( "Amendment No. One ") is made and entered into as of this 28th day of January, 2014 ( "Effective Date "), by and between the City of Newport Beach, a California municipal corporation and charter city ( "City "), and Visit Newport Beach, Inc., a California nonprofit corporation and an IRC 501(c)(6) destination marketing organization ( "VNB "), whose address is 1600 Newport Center Drive, Suite 120, Newport Beach, CA 92660, and is made with reference to the following: RECITALS A. On September 27, 2011, City and VNB entered into a Tourism Promotion, Branding and Marketing Services Agreement ( "Agreement ") for destination marketing services. B. The parties desire to enter into this Amendment No. One to extend the term of the Agreement to December 31, 2024, to switch from an annual to biennial budget process, to update contact information, and to add public benefit funding. C. City and VNB mutually desire to amend the Agreement, as provided below. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM Section 3 of the Agreement is amended in its entirety and replaced with the following: "The term of this Agreement shall commence on September 27, 2011, and shall terminate on December 31, 2024, unless terminated earlier as set forth herein." 2. REPORTS TO THE CITY Section 6(c) of the Agreement is amended in its entirety and replaced with the following: "(c) Budget. In time for presentation to the City Council by the City Council's second meeting in July of each even numbered year of the term, VNB shall prepare and its Board shall adopt a biennial budget for the two (2) twelve (12) month. fiscal years that begin each July 1. The budget shall describe the revenues and expenditures required to meet the Performance Standards and Annual Marketing Plan obligations. The City Council shall review the budget and approve and /or modify and approve the budget. Once the biennial budget is approved by the City Council, the City Council shall review and approve or deny any proposed budget amendments that " increase VNB's "fixed operating costs" by One - Hundred Thousand Dollars and 00/100 ($100,000.00) or more in any twelve (12) month period. "Fixed operating costs" is defined as any expenditure, other than a one (1) time expenditure, that commits VNB to an on -going fiscal obligation." Visit Newport Beach, Inc. Pagel 3. NOTICES Section 17 of the Agreement is amended in its entirety and replaced with the following: "Any notice, demand, request, consent, approval, or communication that either Party desires or is required to give to the other Party or to any other person shall be in writing and either served personally or sent by pre -paid, first -class mail. Any notice, demand, request, consent, approval, or communication that either Party desires or is required to give to the other Party shall be addressed as follows: If to VNB: Visit Newport Beach Inc. Attn: President & CEO 1600 Newport Center Drive, Suite 120 Newport Beach, CA 92660 -6210 If to City: City of Newport Beach Attn: City Manager 100 Civic Center Drive P.O. Box 1768 Newport Beach, CA 92660 With a copy to: City of Newport Beach Attn: Finance Director 100 Civic Center Drive P.O. Box 1768 Newport Beach, CA 92660 Either Party may change its address by notifying the other Party of the change of address. Notice shall be deemed given within three (3) days after the date of mailing, if mailed as provided in this Section." 4. PUBLIC BENEFIT FUNDING Section 23 shall be added into the Agreement and read as follows: "VNB shall contribute One Hundred Fifty Thousand Dollars and 001100 ($150,000.00) per year, commencing annually June 30, 2014, to the City of Newport Beach for expenditure on programs or activities (e.g., public art, cultural and promotional activities, beautification projects, etc.) that benefit the public, as determined by the City Council." 5. INTEGRATED CONTRACT Except as expressly modified herein, all other provisions, terms, and covenants set forth in the Agreement shall remain unchanged and shall be in full force and effect. [SIGNATURES ON NEXT PAGE] Visit Newport Beach, Inc. Page 2 4 IN WITNESS WHEREOF, the parties have caused this Amendment No. One to be executed on the dates written below. APPROVED AS TO FORM: CITY ATT NEY'S OFFICE Date: 2 31 By; , C Aaron C. Harp City Attorney ATTEST: Leilani I. Brown City Clerk Visit Newport Beach, Inc. CITY OF NEWPORT BEACH, a California municipal corporation Date: By: Rush N. Hill, II Mayor VNB: Visit Newport Beach, Inc., a California nonprofit corporation and an IRC 501(c)(6) destination marketing organization Gary C. Sherwin President Debbie Snavely Chair of the Board [END OF SIGNATURES] Page 3s