City Council
Report
City Council Meeting: July 23, 2024
Agenda Item: 5.E
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To: Mayor and City Council
From: David Martin, Director, Administration
Subject: Approval of Exclusive Negotiation Agreement with Revitalization Partners Group, LLC for the Civic Center Auditorium Renovation, Programming and Operation
Recommended Action
Staff recommends that the City Council:
1. Authorize the City Manager to Negotiate and Execute an Exclusive Negotiation Agreement with Revitalization Partners Group, LLC for the renovation, programming, and operation of the Santa Monica Civic Auditorium located at 1855 Main Street.
2. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) of the California Environmental Quality Act (CEQA) Guidelines.
Summary
On December 12, 2023, Council requested staff to issue a Request for Letters of Interest (LOI) to provide an opportunity for individuals and/or entities with the financial means and relevant experience to submit letters of interest for the renovation and operation of the Santa Monica Civic Auditorium as a state-of -the art performance venue. The LOI explicitly stated that the City is not able to provide any financial assistance. This staff report provides a summary of the LOI process and next steps, including Council’s authorization for the City Manager to negotiate and execute an Exclusive Negotiation Agreement with Revitalization Partners Group, LLC for the renovation, programming, and operation of the Santa Monica Civic Auditorium. 2 of 8
Discussion
Community Context
The Santa Monica Civic Auditorium (Civic) is a City-owned facility that was constructed in 1958 and served as one of the region’s leading entertainment venues, hosting a critically acclaimed roster of events including concerts, Academy Award shows, community festivals, and trade shows. On November 12, 2001, the Landmarks Commission designated the Civic as a City landmark and the designation was approved by the City Council at its April 9, 2002 meeting. On June 28, 2005, Council adopted an update to the 1993 Civic Center Specific Plan (CCSP) which set forth planning policies, land use, and development regulations including defining the southwestern corner of the Civic Center as the “Civic Auditorium District” with the Civic Auditorium (Civic) as the cornerstone. The CCSP identified the need to make improvements to the Civic as a venue for large musical and cultural performances as well as exhibitions and community gatherings.
Creative Capital, the City’s cultural plan, approved by Council on February 27, 2007, placed a high priority on renovation and upgrades to the Civic with the goal to serve as a cultural venue or performing arts center that supports high quality, communityresponsive uses including concerts, theatrical shows and other special events. The building was shuttered in 2011 due to seismic issues. The City initiated several efforts in the 2010-2018 period to solicit partners to help renovate and operate the Civic and engaged in a year-long community process with a Council-appointed Santa Monica Civic Committee to help guide redevelopment opportunities for the building and adjacent site. Unfortunately, these solicitation efforts were not successful due to the cost of renovations and lack of City funds, particularly after the dissolution of Redevelopment Agencies and loss of redevelopment funding. Demand is now picking up for this building and the need for a state-of-the-art entertainment venue of comparable size (approximately 2,000-3,000 seats) in the Westside, as evidenced by the recent LOI released by the City in December 2023.
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Surplus Land Act
The disposition of the Civic, including long-term ground leases, is subject to the Surplus Land Act (SLA). The SLA was created by the State of California in 2022 with the goal of helping prioritize the reuse of municipally owned sites throughout the State for affordable housing. Prior to the City being able to solicit proposals from developers and operators to renovate the Civic, the SLA required a state-wide solicitation for affordable housing. On October 11, 2022, in accordance with the SLA, Council declared and adopted Resolution 11470 designating the Civic as “surplus” and authorized the City Manager and designees to implement necessary actions to comply with the SLA.
On November 11, 2022, the City issued a Notice of Availability (“NOA”) to inform affordable housing developers, local park and recreation districts and departments, and school districts that the City-owned surplus land was available with an opportunity to submit an offer for affordable housing or other SLA prioritized purposes. Affordable housing developers were invited to submit interest and proposals to the City by January 13, 2023.
The SLA 90-day good faith negotiations period was in effect from January 13, 2023 through April 13, 2023. On April 11, 2023, Council reviewed and considered the offers received for the Civic and directed staff to continue negotiations with Community Corporation of Santa Monica (“CCSM”) who had partnered with Metropolitan Pacific Real Estate (“MPRE”) as well as the Santa Monica-Malibu Unified School District (“SMMUSD”). On July 25, 2023, Council considered CCSM and MPRE’s revised proposal and directed staff to terminate negotiations as Council did not agree to the proposed price and terms. On October 11, 2023, the City issued a letter informing SMMUSD of the City’s intent to submit the required documentation to seek Surplus Land Act clearance from the State’s Housing and Community Development Department (“HCD”). On November 7, 2023, the City received HCD’s certification of SLA compliance and provisional permission to proceed with the disposition of the Civic pursuant to Government Code section 54230.5 of the Surplus Land Act. 4 of 8
Request for Letters of Interest Process
On December 12, 2023, in the interest of exploring opportunities to redevelop the Civic, Council requested staff to issue a Request for Letters of Interest to provide an opportunity for individuals and/or entities who have the financial means and relevant experience to submit interest for Council’s consideration. Staff issued a Request for Letters of Interest on the City’s procurement portal, OpenGov, on January 5, 2024. The City received four letters of interest from the following entities:
• The Venue Group Hospitality (TVG)
• Live Nation Worldwide, Inc. (LN)
• Sugar Monkey Live (SML)
• Revitalization Partners Group, LLC (RPG)
Two respondents (The Venue Group/TVG and Live Nation) withdrew their LOIs. Live Nation withdrew to join the RPG Team. As part of the LOI process, teams were requested to submit summaries of their experience including but not limited to:
• Renovating and redeveloping buildings with landmark requirements. • Experience operating and programming concerts, arts, and entertainment venues. • Ability to secure financing to fund developments of $100 million or more.
On May 28, 2024, in closed session, the Council considered the LOIs and directed staff to initiate the ENA process with RPG.
Revitalization Partners Group
The Revitalization Partners Group (RPG) is a consortium of Los Angeles based companies with extensive experience in real estate development, finance, live entertainment, and public-private partnerships. Principals in RPG include:
• Geyser Holdings, led by Russell Geyser, has syndicated more than $1 billion in commercial real estate and retains interest and management of $300 million in real estate holdings. Geyser Holdings has over 20 years of experience in estate acquisition, financing, and investment banking. Geyser is affiliated with the JH Snyder Company whose developments include Santa Monica Ocean 5 of 8
Tower, The Water Gardens, Wilshire Courtyard, SAG-AFTRA Square, Marina City Club in Marina del Rey and more.
• The Make Good Group, led by Tim Sexton, is a leading social impact firm formed in 2003 to advise corporate clients on sustainability, social responsibility, and brand strategy. Clients include the Philadelphia Eagles, Seattle Mariners, and Oakland A’s. Sexton produced Live 8, a series of concerts that raised funds for debt relief and poverty in Africa. Mr. Sexton is also intimately familiar with the Civic as a production manager back when the venue was hosting leading music acts. He represented musicians including Jackson Browne, the Rolling Stones, Diana Ross, and many others. • The Azoff Company, led by Irving Azoff, is a privately held entertainment and media company. Mr. Azoff is the former Chairman and CEO of Ticketmaster and Live Nation and currently the CEO of the Azoff Madison Square Garden Entertainment Company.
• The Oak View Group (OVG), led by Tim Leiweke, is a privately held venue development, management, and hospitality services company in the live event industry. Mr. Leiweke is the former CEO of AEG which owns LA Live, the LA Kings and LA Galaxy. OVG, under a private-public partnership with the City of Seattle, invested over $850M to redevelop the Key Arena now known as Amazon’s Climate Pledge Arena. OVG is the operator of the Arena, which is on 74-acres and has a seating capacity of approximately 18,000. • Live Nation is a Fortune 500 Company that promotes, operates, and manages ticket sales for live entertainment internationally. Jordan Zachary, Chief Strategy Officer, will represent Live Nation under the RPG consortium.
Recognizing the complexity of coordinating members, individually and collectively, who hold core competencies in real estate finance and development, building renovation, historic preservation, event creation, promotion and operations, ticketing, venue management, talent relations. branding, marketing, sponsorship, and hospitality, the RPG Team proposes to clearly define the roles and responsibilities of each entity during the term of the Exclusive Negotiation Agreement. The RPG Team will also conduct 6 of 8
detailed feasibility analysis to help inform the proposed renovation and operating requirements, ultimate project scope, and proposed terms of a ground lease.
Exclusive Negotiation Agreement
RPG proposes to enter into an Exclusive Negotiation Agreement (ENA) for a term of six months to initiate necessary due diligence studies and analysis related to the restoration and renovation of the Civic. RPG will engage technical experts and consultants in historic preservation, seismic and structural engineers, ADA compliance, acousticians, and other specialists to evaluate existing conditions, to understand remediation and construction costs and other considerations. RPG will then prepare a comprehensive project scope and timeframe for Council’s approval. If extensions to the ENA are needed, both RPG and the City must mutually agree.
Deal points related to the project scope and performance schedule will be negotiated during the ENA Phase. If negotiations are successful, staff will bring forward a Disposition and Development Agreement for Council approval. The City may, at any time, request review of RPG’s studies and analysis to ensure the City negotiates in the best interests of the City and taxpayers.
As part of the ENA phase, RPG proposes to fund an initial $350,000 cost recovery deposit to cover the City’s staff, consultant, and legal costs. During the ENA term, whenever the Deposit balance reaches Ten Thousand Dollars ($10,000.00) or less, RPG will replenish the Deposit to the Initial Amount, upon written notice from the City.
In the event the ENA is terminated, the Deposit will become non-refundable to the extent necessary to pay expenses incurred or contractually committed to be paid as of the date of termination, and the City shall return to the Developer any portion of the Deposit that is not needed to pay such expenses.
Environmental Review
The Civic ENA is exempt from CEQA pursuant to Section 15061(b)(3) of the CEQA Guidelines which states that CEQA does not apply, “where it can be seen with certainty that there is no possibility that the activity in question may have a significant 7 of 8
effect on the environment.” The ENA does not provide for any physical changes including improvements or development at the Civic Center. Therefore, it can be seen with certainty that actions would not result in adverse physical impacts on the environment, and as such, is categorically exempt from CEQA.
Past Council Actions
Meeting Date Description
4/9/2002
(Attachment A)
Civic Auditorium Landmark Status Upheld by City Council 6/28/2005
(Attachment B)
Council Adopted Update Civic Center Specific Plan
10/11/2022
(Attachment C)
Adoption of a Resolution Declaring the Civic Auditorium as Surplus
12/12/2023
(Attachment D)
Council Request to Issue a Public Notice to Solicit Letters of Interest for the Revitalization of the Civic Auditorium.
Financial Impacts and Budget Actions
As part of the ENA phase, RPG will reimburse the City for any staff, consultant, and legal costs via a Cost Recovery Deposit. The funds will be held in a deposit account for the Civic Center Auditorium project, 01.221060. As expenses are incurred, the deposit will be reduced, and the revenue will be recognized and recorded in account 01700014.415490. Budget adjustments would be incorporated in future budget cycles, as needed.
Prepared By: Nia Tang, Senior Development Analyst
Approved Forwarded to Council
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Attachments:
A. Attachment A: 4/9/2002 Staff Report - Civic Auditorium Landmark Status Upheld by Council (Web Link)
B. Attachment B: 6/28/2005 Staff Report - Council Adopted Update Civic Center Specific Plan (Web Link)
C. Attachment C: 10/11/2022 Staff Report - Adoption of Resolution Declaring the Civic as Surplus (Web Link)
D. Attachment D: 12/12/2023 Staff Report - Council Request to Issue a Public Notice to Solicit Letters of Interest for the Revitalization of Civic (Web Link) E. RPG Levine 2024
F. RPG Oaks 2024
G. Written Comments