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February 15, 2022
ITEM TITLE
Agreement: Approve a Second Amendment to the Core Agreement with the United States Olympic & Paralympic Committee
Report Number: 22-0070
Location: 2800 Olympic Avenue
Department: City Manager
Environmental Notice : The activity is not a "Project" as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
Recommended Action
Adopt a resolution approving a Second Amendment to the Core Agreement between the City and USOPC and related agreements.
SUMMARY
In 2016, the City and the United States Olympic Committee (“USOC”) entered into a Core Agreement in anticipation of a transfer of all of USOC’s right, title, and interest in that certain real property and facilities located at 2800 Olympic Avenue (the “ Chula Vista Elite Athlete Training Center ”) to City on December 31, 2016. The Core Agreement established essential maintenance and operation standards that are necessary and appropriate for successful training and support of elite athletes. In 2020, the City and newly branded United States Olympic and Paralympic Committee (“USOPC”) began negotiating amendments to the Core Agreement to address current and future operational changes at the Chula Vista Elite Athlete Training Center.
In March of 2020, the world changed for all of us as we found ourselves living in the uncertainty of a global pandemic. The USOPC agreed to continue to pay the minimum annual commitment in both 2020 and 2021 while we all adjusted to how to safely operate a large training center during a global pandemic and creatively deal with the loss in revenue. On March 1, 2021, the City received notice from USOPC that it desired to revert to the previously recommended funding model to remove the minimum annual commitment of $3,000,000 starting in January of 2022. Thereafter, the City, in concert with operator Elite Athlete Services, LLC (“EAS”), engaged in negotiations with USOPC on potential amendments to the agreement. On January 27, 2022 , the P a g e | 2
City and USOPC conceptually agreed upon the terms for the following potential amendments: change in party name from USOC to USOPC; extension of the term through December 31, 2024, with a potential additional extension through 2028 ; amendment to the definition of NGBs to include Paralympic governing bodies ; reductions to the minimum annual commitment, and associated reductions to USOPC’s guaranteed access and preferential rates; amendments to athlete and NGB engagement requirements; updates to the operations plan; and updates to the athlete safety standards. City staff also negotiated license agreement(s) with USOPC to allow them to utilize certain facilities at the Chula Vista Elite Athlete Training Center for their on-site operations. This propos ed action would approve the second amendment to the Core Agreement and authorize staff to finalize and execute license agreement(s) with the USOPC , at the rates identified below, along with standard terms and conditions for City licenses, all in forms approved by the City Attorney.
ENVIRONMENTAL REVIEW
The Director of Development Services has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “project” as defi ned under Section 15378 of the State CEQA Guidelines because the activity consists of approval of a Second Amendment to the Core Agreement between the City and USOPC, and does not involve a potentially significant physical impact on the environment; theref ore, pursuant to Section 15060 (c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is required.
Not Applicable
DISCUSSION
In March of 2016, the City and USOC entered into a Core Agreement in anticipation of a transfer of all of USOC’s right, title , and interest in that certain real property and facilities located at 2800 Olympic Avenue (the “Chula Vista Elite Athlete Training Center”) to City on December 31, 2016. The Core Agreement included, among other items, commitments on maintenance and operation standards consistent with what is necessary and appropriate for successful training and support of elite athletes at the Chula Vista Elite Athlete Training Center.
Toward the end of the initial term of the Core Agreement, on December 31, 2020, the newly branded United States Olympic and Paralympic Committee (“USOPC”) and City began negotiating potential amendments to the agreement including the following: options to extend the term of the agreement through 2 024, and potentially through 2028; implementation of background checks and SafeSport policies; expansion of athlete and NGB engagement; modifications to the funding model in Chula Vista to align with the model used for the rest of the USOPC’s training sites; and reductions to the annual minimum commitment, with corresponding reductions in USOPC’s guaranteed access and preferential rates.
In March of 2020, the world changed for all of us as we found ourselves living in the uncertainty of a global pandemic. The USOPC agreed to continue to pay the annual minimum commitment in 2020 and 2021 while we all adjusted to how to safely operate a large training center during a global pandemic and creatively deal with the loss in revenue. On March 1, 2021, the City received notice from the USOPC that it desired to revert to the model previously recommended to remove the minimum annual commitment of $3,000,000 starting in January of 2022. As this was a material change to the original agreement, the City, in concert with operator Elite Athlete Services (“EAS”), began negotiations with the USOPC on potential amendments. On January 27, 2022, the City and USOPC conceptually agreed upon the terms for the following potential amendments to the P a g e | 3
Core Agreement: a change in th e party entity name from USOC to USOPC; extension of the term through December 31, 2024, with a possible additional extension through 2028; amendment of the definition of National Governing Bodies ( NGBs) to include paralympic governing bodies, which histo rically had been referred to as High -Performance Management Organizations; a reduction to the minimum annual commitment to $2,200,000 in 2022, $1,750,000 in 2023, and $1,500,000 in 2024; amendments to athlete and NGB engagement requirements; updates to the operations plan to meet current operational requirements; updates to the minimum usage commitment rates and associated reductions in guaranteed access and preferential rates; and updates to current athlete safety standards. Concurrently with negotiations for the second amendment to the Core Agreement, City staff negotiated license agreement(s) with USOPC for the following Chula Vista Elite Athlete Training Center facilities: Sports Medicine Building (5 ,893 SF) billed as Medical Grade space at $2.85/SF; the High Performance Building (776 SF) billed as grade B+ office space at $1.00/SF; and the Track and Field, Strength & Conditioning sheds billed as unfinished industrial space at $0.90/SF. The proposed license agreement(s) would require USOPC to cover a ll costs inside the buildings (Utilities, janitorial) while th e City would cover all costs outside the building (landscape, exterior maintenance).
The City’s operator, EAS, is in agreement with the proposed changes to the Core Agreement in light of the high demand for the Chula Vista Elite Athlete Training Center in 2022 and beyond, and also the changes in the operation and business model implemented by EAS. EAS had already established a new business model in anticipation of these changes which focuses on generating a breadth of revenue sources, rather than relying so heavily on the USOPC. In 2022, for example, rather than relying on revenues solely from training, EAS has brought on a Chief Revenue Officer overseeing a staff of 4 sales associates focusin g on a variety of categories – training, corporate events, camps & clinics, fantasy camps, and sponsorships. Whereas training has historically comprised 95% of the Chula Vista Elite Athlete Training Center’s revenue, and Team USA has comprised 85% of training revenue, it is anticipated that in 2022 training will comprise 75% of the Chula Vista Elite Athlete Training Center’s revenue (and Team USA only 50% of that), with a decrease each year as corporate events and in particular sponsorships play a greater role.
The Chula Vista Elite Athlete Training Center is open to the public every day for anyone who wants to walk to Olympic Parkway or stop in the team shop and look around th e amazing campus. EAS is committed to hosting events for the City and the community at large. Obviously , the 4 th of July Fireworks show is the highlight of the year, but Chula Vista Elite Athlete Training Center has hosted many other events over the years. In 2021, the Chula Vista Elite Athlete Training Center was still limited i n part due to Covid but reopened the BMX Development Track open to local youth, hosted the San Ysidro High School Homecoming, An Evening with Heroes (benefiting the Chula Vista Police Department Foundation), the Chicano Federation Camp, and the 5K benefiting the Burn Institute.
In 2022, the Chula Vista Elite Athlete Training Center has more events on the docket, including San Ysidro High School Homecoming, Foundation Fighting Blindness 5K Fun Run, US4 Warriors Dinner, Mar Vista High School Prom, Montgomery High School Homecoming, American Heart Association Heart Walk , and will be proud to welcome the Chula Vista Police Foundation again for the Evening with Heroes.
EAS has brought on a staff member dedicated to booking and fulfilling events like these. And rew DeMaria can be reached at [email protected] .
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Furthermore, it should be noted that above reductions to the annual commitments are only minimum guarantees. There has been a renewed focus by the Chula Vista Elite Athlete Training Center’s management to improve and grow relationships and City staff and EAS project that revenues from Team USA will far exceed the minimums year after year, especially in the buildup to the Los Angeles 2028 games.
DECISION-MAKER CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that it is not site-specific and consequently, the real property holdings of the City Council members do not create a disqualifying real property-related financial conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.).
Staff is not independently aware, and has not been informed by any Council member, of any other fact that may constitute a basis for a decision-maker conflict of interest in this matter.
CURRENT-YEAR FISCAL IMPACT
No anticipated current-year fiscal impact
ONGOING FISCAL IMPACT
No anticipated ongoing fiscal impact
ATTACHMENTS
Second Amendment to Core Agreement
Staff Contact: Deputy City Manager, Kelley Bacon