DATE: October 21, 2026
TO: Honorable Mayor and City Council Members
FROM: Planning and Development Department
2026-092
REQUEST FOR CITY COUNCIL ACTION
SUBJECT:
VENUE MANAGEMENT AND OPERATING AGREEMENT WITH KNITTING FACTORY ENTERTAINMENT, INC. FOR A LIVE MUSIC VENUE AT 152 E. SIXTH STREET EXECUTIVE SUMMARY:
This staff report asks the City Council to approve the Venue Management and Operating Agreement with Knitting Factory Entertainment, Inc. (The Knitting Factory) in the not to exceed amount of $100,000 for design consultation and a not to exceed amount of $800,000 for live music venue operating services once the venue is operating, for a total agreement not to exceed amount of $900,000. Through this agreement, the City of Corona (City) will hire The Knitting Factory to run the music venue, inclusive of hiring staff, facility maintenance, booking of the bands, food and beverage service, and the general management of all associated activities at the facility. The naming of the facility has yet to be determined and will be developed over the course of the design process.
RECOMMENDED ACTION:
That the City Council:
a. Approve the Music Venue Agreement with Knitting Factory Entertainment, Inc. for the Venue Management and Operating Services in the amount of $900,000 and waive any and all minor irregularities in the proposal, if applicable. b. Authorize the City Manager, or his designee, to execute the Venue Management and Operating Agreement with Knitting Factory Entertainment, Inc. for an initial term of five (5) years, with one (1) five-year renewal option, in an amount not to exceed $900,000.
c. Authorize the City Manager, or his designee, to issue a Purchase Order to Knitting Factory Entertainment, Inc. in the amount of $900,000 for Venue Management and Operating Services.
d. Authorize the City Manager, or his designee, to negotiate and execute nonsubstantive extensions, change orders, and amendments up to $90,000 or 10% of the original contract amount.
e. Authorize an appropriation in the amount of $100,000 from the Corona Mall Properties Fund (FD_1130) to the Office of Economic Development’s South Mall Admin (CC_1980) operating budget).
BACKGROUND & HISTORY:
From 1973 to 2008, the Showcase Theater occupied one of the retail suites in the commercial center now known as The Hub., originally operating as a movie theater before transitioning to an alternative rock club in 1993. After the transition, and under new ownership, the Showcase operated as a live music venue for fifteen years, with notable alternative, ska, and punk rock bands performing as the facilities. With its closure in 2008, downtown Corona lost a major community destination and cultural center.
As a part of the Downtown redevelopment efforts, The Hub. was designated as a center for dining and entertainment. As such, the City has been working to bring back a dedicated live music venue as a major anchor for the center, and to further reinforce the overall downtown revitalization initiatives. Since the City obtained ownership of the center, multiple venue operators have reviewed the original Showcase location, but given its limited capacity, its reuse as a music venue was deemed infeasible.
With Corona-Norco Unified School District (CNUSD) vacating the building at 152 E. Sixth Street, an opportunity presented itself for a new venue that offers significantly increased audience capacity, along with space to accommodate modern food and beverage facilities, storage, and performer accommodations.
This agreement, and the associated venue construction, seeks to reestablish a live music venue in downtown Corona, building on the history of the former Showcase Theater, while creating a new legacy.
The identified operator, The Knitting Factory, was founded in 1987 and is an experienced national concert venue operator, owning or operating venues of similar scope and scale as the proposed for the 152 E. Sixth Street building.
ANALYSIS:
The agreement addresses the initial design work, opening, ongoing operations of the venue, staffing, funding, and protections for the City. A summary of the key deal points is as follows:
Purpose and scope of the agreement
The City will retain ownership of the approximately 14,576-square-foot property and engage The Knitting Factory to operate it as a live music and entertainment venue to stimulate Downtown Corona's growth, and provide quality, family-friendly entertainment opportunities. The operator receives an exclusive license to manage and operate the venue, including booking, promotions, events, food and beverage services, staffing, and maintenance.
Programming and event selection
The Knitting Factory will have primary responsibility for programming and booking events, including selecting artists, setting performance schedules, and determining artistic and promotional details. However, the operator must submit a projected event schedule to the City at least 45 days before the start of each quarter for City review. The City retains authority to exclude particular artists, acts, or events when significant operational, safety, financial, or reputational concerns arise.
Facility design and pre-opening planning
Before the venue opens, The Knitting Factory will provide consulting services to the City regarding initial facility design, construction coordination, staffing, programming strategy, marketing, systems implementation, pre-opening preparation, and regulatory compliance.
Within 60 days after receiving the City's construction completion timeline, the operator must submit a detailed scope of work and schedule aligned with the City's construction schedule. The City must approve that scope in its sole and absolute discretion. The City will pay a fixed $100,000 development fee: $30,000 when initial design work begins and the remaining $70,000 in monthly installments of $10,000, based on ongoing efforts.
Operator compensation and performance incentives
The agreement provides two forms of management compensation:
Management fee: 5% of monthly gross revenue up to $500,000 per month Incentive management fee: 10% of annual gross revenue exceeding $6 million
City approval of budgets and operating plans
The Knitting Factory must submit a business plan for City’s review and approval, including projected revenue and expenses, talent booking, marketing, staffing, and operational services. This budget will be used by the City in its annual budgeting process to allocate The Hub. revenues toward the venue’s operations.
Financial reporting, audits, and accountability
The agreement establishes financial reporting and oversight requirements to help the City monitor performance and protect public funds. The operator must provide quarterly financial reports, including income and expenses, budget comparisons, maintenance logs, and management fee and profit distributions. Annual financial statements must be prepared in accordance with generally accepted accounting principles and accompanied by an independent CPA's opinion. The City retains audit rights throughout the agreement, and for four years after termination. If an audit identifies overcharges or underpayments exceeding 5% of total billings for the audited period, the operator must reimburse the City for the audit's actual cost.
Term, termination rights, and transition provisions
The agreement provides for an initial five-year term beginning when the venue opens to the public, with one potential five-year renewal at the operator's option, provided it is not in default and gives the required 180 days' advance notice. Within the agreement, the City has several important termination rights:
Termination for cause: The City may terminate for a material breach if the operator fails to cure it within 30 days after written notice, unless the parties agree otherwise. Termination without cause: The City may terminate for any reason, or no reason, with 180 days' written notice. However, the City must pay the operator the management fee for the remaining term, up to a maximum of 12 months, calculated using the gross revenue for the month in which notice is given. Immediate termination: The City may terminate immediately for specified circumstances, including material public safety risks, qualifying bankruptcy events, or substantial destruction of the venue when the City elects not to restore it. Pre-construction termination: Before construction commences, the City may decide in its sole and absolute discretion not to proceed with construction or operation. In this circumstance, the City must reimburse documented and verified, previously unpaid costs incurred for the venue, provided the operator notified the City in advance.
The operator may also terminate with 180 days' written notice. Upon termination, the operator must surrender the facility, City-owned personal property, operating funds, records, and specified contracts and warranties.
Ownership, maintenance, and other protections for the City The City retains ownership of the venue and all personal property used in its operation.
The Knitting Factory is responsible for routine maintenance and repairs, maintaining the facility in acceptable condition, staffing, security planning, applicable operating permits, and compliance with applicable laws. The operator must obtain City approval before making physical alterations. The City also retains inspection rights and may use the venue for up to three days per calendar year without a rental fee, although it must pay actual, documented labor costs.
Additional revenue sources
The agreement provides for revenues directly from the operations of the facility, with an ability for the City to add a surcharge to ticket sales to supplement revenue if needed.
The facility could generate additional revenues through naming rights and sponsorships, as well as agreements with beverage companies through exclusive pouring rights. As the facility progresses through the design process, staff will work to identify these types of additional participants in the facility, to guarantee the financial health of the venue.
FINANCIAL IMPACT:
The contract provides an initial $100,000 to The Knitting Factory for venue design consultation. Therefore, approval of the recommended actions will result in an appropriation in the amount of $100,000 from the Corona Mall Properties Fund (FD_1130) to the Office of Economic Development’s South Mall Admin (CC_1980) operating budget).
The remaining $800,000 maximum will be funded by revenue generated from the operations of the venue. Once the facility is open, The Knitting Factory will receive five percent (5%) of the Gross Revenue. Gross revenue is anticipated to be up to $500,000, affording the Knitting Factory up to $25,000 per month. The contract balance of $800,000 equates to approximately 32 months of operations. Combined with the $100,000 design fee, the proposed not-to-exceed amount of this agreement is $900,000. As venue revenue is received, staff will return to City Council for any necessary revenue and appropriation adjustments to support the related expenditures.
For exceptional performance, where the venue is generating more than $6,000,000 per year, The Knitting Factory will receive an additional incentive payment of ten percent (10%) of that increased Gross Revenue. This incentive is not currently included in the proposed not-to-exceed amount of this agreement. Staff will return to City Council for any necessary additional appropriations and agreement amendments associated with exceptional performance.
Finally, once construction has commenced, the City will provide funding for start up costs including staffing and training, to be determined during the design process. This payment is expected in late Fiscal Year 27 or early Fiscal Year 2028, and is expected to be approximately $500,000. The current proposed not-to-exceed amount of this agreement does not include these start up costs. Staff will return to City Council for any necessary additional appropriations and agreement amendments, as the start up costs are finalized.
ENVIRONMENTAL ANALYSIS:
This action is categorically exempt pursuant to Section 15061(b)(3) of the Guidelines for the California Environmental Quality Act (CEQA), which state that project is exempt from CEQA if the activity is covered by the common sense exemption that CEQA applies only to projects that have the potential for causing a significant effect on the environment.
Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. This action is to approve a Venue Management and Operating Agreement with Knitting Factory Entertainment, Inc., and there is no possibility that approval of the recommended actions will have a significant effect on the environment. Therefore, no environmental analysis is required.
PREPARED BY: JOEL BELDING, PLANNING AND DEVELOPMENT DIRECTOR REVIEWED BY: JUSTIN TUCKER, ASSISTANT CITY MANAGER
ATTACHMENTS:
1. Exhibit 1 – Venue Management and Operating Agreement