City Council
Report
City Council Meeting: December 12, 2023
Agenda Item: 5.F
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To: Mayor and City Council
From: David Martin, Director, Administration
Subject: Authorize the City Manager to Enter into a License Agreement with Cirque du Soleil
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of categorical exemption pursuant to Section 15301 (Existing Facilities), Section 15304 (Minor Alterations to Land), and Section 15323 (Class 23 Normal Operations of Facilities for Public Gatherings) of the California Environmental Quality Act (CEQA) Guidelines; and
2. Authorize the City Manager to negotiate and execute a license agreement with Cirque du Soleil to use a portion of Lot 1N from October 1, 2024 to January 24, 2025.
Summary
In accordance with the 1550 PCH Parking Lot Cultural/Entertainment Event Policy, the City issued a call for proposals for cultural or entertainment events in Lot 1-North located at 1550 Pacific Coast Highway, the surface parking lot directly north of the Pier.
Cirque Du Soleil (Cirque) submitted a proposal for the 2024-2025 event season for its "Kooza" production. The total occupation period, including move in and tear down, would be October 1, 2024 through January 24, 2025, with performances from October 22, 2024 to Jan 5, 2025 (approximately 10 weeks). Cirque du Soleil is a Canadian entertainment company founded in 1984 that produces world-renowned fixed and traveling circus arts shows featuring acrobatic and artistic performances. Cirque first performed next to the Santa Monica Pier in 1987. More recently, Cirque has staged productions in 2009, 2012 and 2014.
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The proposed rental fee revenue to the Beach Fund for Cirque’s 2024-2025 season is estimated to be $1,547,882, derived from a square foot fee for the amount of space occupied plus the amount to cover lost parking revenue. Funds would directly support beach operations and maintenance. Additional anticipated economic benefits to the City include patron parking revenues at the City’s parking structures, purchase of local supplies and services by Cirque for its operation, accommodations for its staff and performers, increased collateral spending by Cirque visitors in local restaurants, hotels and other businesses and the generation of additional sales and transient occupancy taxes. To mitigate potential impacts to neighboring businesses on the Pier, Cirque proposes to provide direct and in-kind assistance in addition to other mitigation measures.
Discussion
The Council-approved 1550 Lot Cultural/Entertainment Event Policy was initiated as a means to enliven the beachfront and attract visitors during the slower times of the year.
It was also intended to offer unique cultural and entertainment opportunities to the community and to generate economic benefits for the City as well as tourism and hospitality sectors.
The City issued a Request for Proposals (RFP) in June 2023 and received three responses by the deadline from Cirque du Soleil, Spirit Awards and LA Wine and Food Festival. The evaluation panel consisted of representatives from Santa Monica Travel and Tourism, Santa Monica Pier Corporation, Office of the City Manager, and Office of Pier Management. The evaluation panel reviewed and rated the proposals using the evaluation criteria published in the RFP. Key considerations for the evaluation panel in the review of the proposals included the degree to which an event offers a unique cultural or entertainment experience, demonstrates clear measurable economic benefit to the City and local businesses, including Pier lessees, contributes to the Beach Fund, addresses traffic and parking impacts, and minimizes environmental impacts. The Independent Spirit Awards and LA Wine & Food Festival sought a February 12 to March 8, 2024 occupancy in the 1550 lot and Council authorized the negotiation of a license agreement on November 14, 2023.
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As part of the review and assessment of the Cirque’s proposal, the evaluation panel asked for more specific information and raised a number of issues in several key areas that needed to be addressed including: the initial timeframe proposed by Cirque, the need for comprehensive marketing and hotel packaging, more details on parking and transportation, and efforts to address neighboring business and residential impacts. The evaluation panel requested certain modifications to Cirque’s proposal to better align with the objectives of the extended event’s policy. This resulted in Cirque’s shifting its proposed timeframe from spring/summer to the City’s off-peak visitor period of fall/winter as well as several other adjustments to better address concerns expressed by stakeholders further described below.
Based on Cirque’s responses and commitment to have conditions incorporated into a license agreement, staff has determined that the proposal as presented below is responsive to the key criteria and will provide clear economic benefit to the City and local businesses, and enhance the Santa Monica brand and attractiveness as a major event venue -- contingent upon full execution of the recommended license agreement conditions and mitigations as outlined in the Key Terms and Proposed Mitigation section of this report.
At its July 25, 2023 meeting, Council Item 16 -C directed the City Manager to “explore and propose policy and regulatory changes needed to elevate Santa Monica’s attractiveness as a major event venue. Positioning Santa Monica as a sought-after location to attract both local and international events would facilitate the City’s ability to proactively capitalize on several upcoming opportunities and support local businesses, stimulate economic recovery, further promote tourism, and provide new revenue sources to fund community programs and services for Santa Monica residents”.
Cirque has earned a reputation as a producer able to deliver world-class cultural and entertainment shows. Cirque’s return could provide new opportunities for the City’s businesses to showcase themselves especially during the holiday season as well as deliver a positive and memorable experience for the community as Cirque’s production 4 of 9
in Santa Monica is geared not only for tourists, but for those who live and work here.
Cirque would also be required to develop and gain City approval of a comprehensive Parking and Traffic Management Plan that could be used as a model for other large events the City hopes to attract in the future.
Following Cirque’s 2009 Santa Monica stay, the City commissioned an economic impact study which concluded the net fiscal benefit in the City was approximately $16.7 million (equivalent to $22.5 million in 2023 dollars) including direct and indirect economic benefit such as the rental fee income to the Beach Fund; spending by visitors in restaurants, hotels, shopping, parking and transportation; creation of additional employment opportunities during the period of the event; and hotel room and local sales tax revenue generated from those attending the event. The 2009 economic impact study noted $130,000 in sales and transient occupancy tax increases to the General Fund. For the Pier, the study reported Cirque generated an overall net gain for pier businesses as well, predominately for food and beverage businesses, however entertainment businesses saw a 1 percent reduction in revenues during the period of Cirque’s occupation. Cirque’s commitment and efforts to provide economic gains to the City as a whole as well as to Pier merchants, especially those who in the past may have sustained negative impacts, are described below.
Key Terms and Mitigation Measures
• The site Occupation Period will run from October 1, 2024 to January 24, 2025. • The Performance Period will be from October 22, 2024 to January 5, 2025, with shows Wednesday through Sundays (dark Mondays and Tuesdays). • Cirque will occupy a similar footprint as in 2014 as shown in Attachment C. • In addition to the site rental fee, Cirque will also be responsible for the payment of fees for all permits, licenses and services required to support the event. 5 of 9
• Cirque will update and follow the Parking and Traffic Management Plan as approved by the City which may include, measures not limited to shuttling guests from off-site parking to the site, designating Uber and Lyft drop-off points and collaboration with Big Blue Bus and Metro to incentivize guests to use public transit. The City’s mobility team will work with Cirque on updating and developing new transportation demand strategies that can be tested and refined in advance of the upcoming reconstruction of the Pier Bridge in 2025 and the Summer Olympics in 2028. These efforts can help to reduce future parking and traffic impacts for major events. Also, since Cirque’s prior visit to Santa Monica, the emergence of ridesharing and the arrival of the Expo light rail has reshaped the transportation landscape. Furthermore, the City increased parking inventory within the 1550 lot when a new paved section known as the Deauville site was added in 2020.
• Cirque will commit, whenever possible, to implement a “Buy Local” policy for all its products and services while performing at the Santa Monica Pier. • Cirque will comply with all sustainability requirements and practices including a recycling and food waste program and other environmental and conservation measures.
• Cirque will comply with all noise regulations and will utilize noise monitoring devices to ensure compliance. Performances will also conclude no later than 10:00pm.
• To address neighborhood questions and impacts, Cirque will establish an on-site representative from set-up through demobilization to responsively handle information requests, complaints and monitor noise.
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Cirque has agreed to the following additional business accommodations which will be incorporated into the proposed License Agreement:
• Cirque commits to investing $300,000 in the local media, including print and outdoor advertising. These local expenditures include but are not limited to local Public Relations, media stunts, and activities with the Santa Monica Pier Corporation (SMPC), SM Travel and Tourism (SMTT), as well as the Santa Monica Chamber of Commerce and Downtown Santa Monica (DTSM). • Cirque will commit to cross promotions with the SMPC, Pier tenants, and SMTT and integrate special Pier/local partner offers on the Cirque website including the ability for guests to make ‘add-on’ purchases from Pier businesses that wish to participate. For example, when purchasing a ticket, a guest would be able to purchase certificates for a meal or activity on the Pier. If a guest chose to purchase ‘add-ons’ Cirque would remit the revenue to the businesses. Cirque will also commit to provide tickets to partners and tenants for their own marketing and public relations efforts.
• Cirque will commit to using a 3rd party vendor to facilitate package deals with hotels and tickets to encourage guests to ‘stay a while’. • Cirque will provide a grant of $50,000 to the SMPC that will support free community programing on the Pier and have artists perform Pier visits prior to and during the show’s run.
• Cirque will provide a grant of $100,000 to the SMPLA to use at their discretion. • Cirque will work with Pacific Park on cross promotions and value-added partnerships.
• Cirque will continue its partnership with the Police Athletic League (PAL) and other local organization supporting students and at-risk youth. 7 of 9
• Cirque will offer various ticket price points including discounted children’s tickets, and family package tickets.
Outreach and Commission Action
Public outreach included Cirque’s presentation to the Santa Monica Pier Lessee Association (SMPLA) on October 3, 2023, and a presentation to the Santa Monica Pier Corporation (SMPC) Board of Directors on November 20, 2023. Attendees at the SMPC board included board members, a representative from the SMPLA and representatives from Pacific Park. A notice was sent to residents and businesses in the area inviting them to the meeting but no residents or other businesses were in attendance.
SMPLA’s representative shared that it opposes Cirque’s return. Its preference was for the production to conclude and leave the lot prior to the winter holiday season or locate instead to the Santa Monica Airport. Both requests were evaluated by Cirque representatives as difficult to accomplish due to significant operational and logistical issues. The SMPLA position was that their support for the return of Cirque could only occur with certain accommodations, some of which have been accepted by Cirque and are described in the staff report and proposed to be incorporated into the License Agreement as conditions of performance.
The Santa Monica Pier Cart Association, at their meeting on November 14, 2023, voted to unanimously support the Cirque du Soleil return after concluding the greater good for the business economy as a whole outweighed concerns.
While the SMPC board did not make a motion to forward to Council, board members expressed many concerns about Cirque’s proposed stay including the reduced parking availability for pier visitors and the potential negative impacts on Pier businesses including on its own organization. A concern was expressed that the SMPC could be setback financially even with the $50,000 grant from Cirque if they could not book as many event rentals on the Pier deck during the same period. Other members hoped the 8 of 9
Pier Corp could be made whole if there was a loss of revenue attributed to Cirque’s stay and that Cirque and the tenants could continue to have more discussions.
Environmental Review
The agreement for Cirque events is categorically exempt pursuant to Section 15301 (Class 1 - Existing Facilities), Section 15304 (Class 4 - Minor Alterations to Land), and Section 15323 (Class 23 - Normal Operations of Facilities for Public Gatherings) of the California Environmental Quality Act (CEQA) guidelines. Section 15301 provides exemption (Class 1) for the operation, repair, maintenance, or minor alteration of existing public or private structures or facilities, involving negligible or no expansion of use. Section 15304 (Class 4) provides exemption for the temporary use of land having no permanent effect on the environment. The events qualify as a Class 1 and Class 4 exemption as they would occur on an existing parking lot that the City will license for a temporary use, involving no expansion of an existing use. Section 15323 exempts the normal operations of existing facilities for public gatherings for which the facilities were designed, where there is a past history of the facility being used for the same or similar kind of purpose. The existing lot 1N (1550 PCH) Parking lot has been previously used for special events, and therefore, the proposed agreement for the event is categorically exempt from CEQA.
Past Council Actions
Meeting Date Description
7/25/2023 Approved Item 16 C Request by Mayor Davis, Mayor Pro Tem Negrete and Councilmember Zwick that the City Council direct the City Manager to explore and propose policy and regulatory changes needed to elevate Santa Monica's attractiveness as a major event venue. Positioning Santa Monica as a sought-after location to attract both local and international events would facilitate the City’s ability to proactively capitalize on several upcoming opportunities and support local businesses, stimulate economic recovery, further promote tourism, and provide new revenue sources to fund community programs and services for Santa Monica residents.
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Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the recommended action. Staff will return to Council if specific budget actions are required in the future. The City will receive $1,547,882 in revenues for the use of lot 1N.
Revenues will be deposited in Beach Fund Account 11700001.415290. Any budget adjustments will be incorporated as part of the FY 2024-25 Exception-based Budget process, which will be presented to Council in May 2024.
Prepared By: Elana Buegoff, Pier Administrator
Approved Forwarded to Council
Attachments:
A. 7/25/2023 Item 16-C (Web Link)
B. Economic Impact Report 10.11.10
C. Proposed Footprint
D. Signed_OAKS_INITIATIVE_2023
E. Written Comments
F. PowerPoint Presentation