STAFF REPORT
City of Lancaster
CC 21
5/7/2024
JC
Date: May 7, 2024
To: Mayor Parris and City Council Members
From: Sonya Patterson, Director of Parks, Arts, Recreation and Community Services Subject: LANCASTER MUNICIPAL STADIUM OPERATING AGREEMENT AMENDMENT No. 1
Recommendation:
A. Approve Amendment No. 1 to the Lancaster Municipal Stadium Operating Agreement.
B. Authorize the City Manager or his designee to execute Operating Agreement Amendment.
Fiscal Impact:
Approval of the Operating Agreement Amendment No. 1 will result in the City receiving an increase in annual revenue in the amount of $60,000 year one (1), and increasing by two percent (2%) annually.
Background:
On August 23, 2023 City Council approved the operating agreement for the Lancaster Municipal Stadium with Antelope Valley Soccer, Inc. (Club). Through this agreement the club and the City of Lancaster (City) are collaborating to bring professional soccer to the Antelope Valley with games to be played in a renovated Lancaster Municipal Stadium (Stadium). The parties have developed a budget and plan for the Stadium renovation (Stadium Master Plan) intended to optimize the professional soccer experience for fans and players alike; and with the purposes of staging professional and amateur men’s and women’s soccer competitions as part of the United Soccer League (USL) on a year-round basis.
Among other benefits, the project is intended to revitalize the Stadium and to create economic, educational, and sporting opportunity for the community. Above all, the project is intended to create a point of civic pride for entire Antelope Valley for generations to come.
The following is a summary of the proposed Operating Agreement Amendments:
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1.4 Term: The term of the agreement will remain for 10 years, with the Operator having the option to renew for an additional 10-year period. The automatic termination language is amended to include: (b) the parties fail to agree on the final specifications of the planned Stadium renovations by August 31, 2024.
Addition of 3.2 Facility Enhancement Fee: The Operator shall pay to the City an annual fee in the amount of Sixty Thousand Dollars ($60,000.00) for facility enhancements provided by the City pursuant to this Agreement (the “Facility Enhancement Fee”).
Pursuant and subject to section 3.3, the License Operating Fee shall be paid by the Operator in equal quarterly installments beginning on the first day of the fourth full month after the Effective Date. Beginning on the first (1st) anniversary of the Effective Date, the Facility Enhancement Fee shall be increased annually by two percent (2%). In the event the Operator fails to timely make any quarterly Facility Enhancement Fee payment, the City may elect (upon written notice to the Operator) to require all future quarterly Facility Enhancement Fee payments be made in advance.
11. Default by Operator and City’s Remedies: the sections below are amended:
11.1 Default by Operator. Subject to Force Majeure as defined in section 14.20, each of the following constitutes an “Event of Default by Operator”:
11.1.1. The Operator shall fail to timely make any payments to the City as required hereunder, including, without limitation, any License Operating Fee and/or Facility Enhancement Fee payment when due to the City within thirty (30) days after written notice from the City for nonpayment thereof;
12.1 Default by City. Subject to Force Majeure as defined in section 14.20, each of the following constitutes an “Event of Default by City”:
12.1.1 The City shall fail to keep, perform and observe each and every promise, covenant, condition and agreement set forth in this Agreement on its part to be kept, performed or observed within thirty (30) days after written notice of default thereunder from the Operator, except where fulfillment of the City’s obligation requires activity over a period of time and the City shall have commenced to perform whatever may be required to cure the particular default within ten (10) days after such notice and continues such performance diligently and without interruption except for causes beyond its control. Notwithstanding the foregoing, the Parties acknowledge and agree that the Stadium plan and the timely completion of the City’s obligation under Article 5 are required by the Operator to comply with USL requirements and that time is an essential matter herein. Subject to Force Majeure as defined in section 14.20, in the event that the Operator cannot use the Stadium prior to the start of any season in which the Operator will play that season (as reasonably determined by Operator and/or USL), the Operator will have the right to terminate this Agreement.
13. Option to Renew License. Provided that the Operator is not in default under the Agreement, the Operator, will at its option have the right to renew this Agreement during the Term for the following additional 10 years (the “Renewal Term”) commencing on the day following the expiration of the Term, which option must be exercised by notice in writing to the City no sooner than twelve (12) months but no later than three (3) months 1 6
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prior to the expiration of the Term. If the Operator exercises its right to renew its License pursuant to this section 13, all the terms and conditions in this Agreement will be binding during the Renewal Term, except for (a) the right of the renewal exercised, (b) the License Operating Fee which shall be adjusted as of the first day of the Renewal Term by the percentage increase equal to CPI for the previous 12-month period. If the CPI for the previous twelve-month period decreases or remains unchanged, then the License Operating Fee for the Renewal Term will be the previous year’s License Operating Fee, and (c) the Facility Enhancement Fee shall continue to increase pursuant to Section 3.2 hereof.
14.20 Force Majeure Events. As used in this Agreement, the term “Force Majeure Event” means declared or undeclared war, acts of terrorism, sabotage, riot or acts of civil disobedience, acts or omissions of governmental agencies, accidents, fires, explosions, floods, earthquakes, or other acts of God, strikes, labor disputes, shortages of materials, or any other event not within the control of the Party claiming force majeure and not caused by the gross negligence or intentional wrongful conduct of the Party claiming force majeure.
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Attachment:
Lancaster Municipal Stadium Operating Agreement Amendment No. 1