ADMINISTRATIVE REPORT
MEETING DATE: August 13, 2025 AGENDA CATEGORY: Consent - Agreements TO: Honorable Mayor and City Council
FROM: Christian Clegg, City Manager
DATE: July 1, 2025
SUBJECT: Amendment No. 3 to Facilities Management Agreement No. 13-038 with ASM Global and AEG Management Bakersfield to eliminate the $500,000+ base fee paid by the City to the Manager, eliminates the $500,000 operating loss currently covered by the City, and pays the Manager of the Facilities an annual payment equal to 50% of the Net Operating Income for the management and operations of Dignity Health Arena, Theater, & Convention Center; Valley Children’s Ice Sports Center; and Dignity Health Amphitheatre. (Ward 2)
RECOMMENDATION:
Staff recommends approval of the amendment.
BACKGROUND:
On March 20, 2013, the City of Bakersfield and AEG Management Bakersfield, LLC, entered into a Facilities Management Agreement for the management and operations of the Dignity Health Arena, Theater, & Convention Center; Valley Children’s Ice Sports Center; and Dignity Health Amphitheatre. Agreement No. 13-038 granted AEG Management Bakersfield authority and responsibility to manage, operate, and market the Facilities in accordance with the terms of Agreement No. 13-038 based on their qualifications to staff, manage, operate, and maintain the Facilities in order to achieve the stated goals and objects outlined in the original Request for Proposals.
On July 13, 2020, Amendment No. 1 to Agreement No. 13-038 was amended to temporarily stay the City’s reimbursement to the Manager until January 2021 due to the COVID-19 pandemic. On January 25, 2023, Amendment No. 2 to Agreement N0. 13 -038 was amended to exercise the extension of the term of the Agreement to June 30, 2028, pursuant to Section 6.1.2 of Agreement No. 13-038.
This proposed Amendment No. 3 to Agreement No. 13 -038 would change the financial incentives and responsibilities of the Agreement. Amendment No. 3 to Agreement No. 13-038 proposes to eliminate the $500,000+ base fee paid by the City to the Manage r, eliminates the $500,000 operating loss currently covered by the City, and pays the Manager of the Facilities an annual payment equal to 50% of the Net Operating Income. In this new model the Manager will assume 100% of the Aggregate Net Operating Loss, where-in the current Agreement the City assumes the loss.
FISCAL IMPACT:
The City will no longer pay the Manager a yearly management fee of $500,000+ and will no longer be responsible for the Aggregate Net Operating Loss , currently up to $500,000 . Moving forward the City would split the Net Operating Income, 50/50, with the Manager. Without having the burden of the management fee and the aggregate operating loss, the City would be potentially saving one million dollars per year.
COUNCIL GOAL:
Community Character & Quality of Life
ATTACHMENTS:
1. Amendment No. 3 to Agreement No. 13-038
2. DocuSign Summary