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04/08/1996 (2) c' COMMISSION City Commission Minutes Date, ;E ;1 CITY COMMISSION SPECIAL MEETING CITY OF CLEARWATER Harborview Center Catering Contract April 8, 1996 Present: Rita Garvey J. B. Johnson Robert Clark Ed Hooper Karen Seel Elizabeth M. Deptula Kathy S. Rice William C. Baker Parnela K. Akin Cynthia E. Goudeau Mayor/Commissioner Vice-Mayor/Commissioner Commissioner Commissioner Commissioner - Arrived 1:03 p.m. City Manager Deputy City Manager Assistant City Manager City Attorney City Clerk The Mayor called the Special Meeting to order at 1:00 p.m. at City Hall. To provide continuity for research, items are in agenda order although not necessarily discussed in that order. food an beverage ifQr th for the period 04/08/96 - 09130101 L) The City retained GFS (Globe Facility Services) to provide quality management operational services at the Harborview Center. In Harborview's budget, the City Commission included a fully developed banquet serving kitchen which will add income to the Center and be managed by GFS. This concept is designed to maximize income and consolidate the alcoholic beverage license to one server, thereby meeting State guidelines for serving alcoholic beverages on a regular basis. With these goals in mind and based on Commission direction at the January 2, 1996, Work Session, GFS issued a RFP (Request for Proposal) for Food and Beverage Services at the Harborview Center, The RFP required each firm provide: 1) demonstrated ability to maximize potential revenues; 2) resumes of Operator's Management Team; 3) labor schedules and staffing charts; 4) proposed marketing program ; 51 operating experience; 61 financial resources; 7) specific experience; 8) operating plan; and 9) training practices. A short list of four potential operators were interviewed on February 16, 1996 by the evaluation committee consisting of : 1) GFS Corporate President Mich Sauers; 2) GFS Corporate Director Ken Young; 3) GFS General Manager Barry Strafacci; 41 GFS Harborview Financial Director David Ransdell; and 5) City of Clearwater Purchasing Manager George McKibben. The evaluation and interview process identified two firms as exceptional potential operators. Each has advantages as follows: 1) Boston Concessions Groups - a) strong financial resources; b) convention center experience (Broward County); c) national purchasing advantages; d) national network of trained personnel; e) availability of mobile kitchen; and f) experience in purchasing kitchen and banquet equipment and 2) Delectables Catering - a) local company; b) owners are chefs and banquet managers; c) "° msp04.96 1 04/08/96 hotel banquet experience; d) creativity and enthusiasm; e) local marketing knowledge and experience; and f) no conflict of interest. After long negotiations, GFS recommends awarding the Food and Beverage Service to Boston Concession Group who will, in turn, enter into an agreement with Delectables Catering. The contract will be a management fee based agreement with the contractors receiving a percentage fee based on gross receipts, as an incentive to drive sales. The contractors will receive a percentage of Net Operating Profit as an incentive to manage the business efficiently and profitably. They have agreed to provide the business the necessary operating capital and interest free cash advance of $100,000 to purchase the banquet equipment necessary to operate in a first class manner and an additional $150,000 at prime plus 1 %- The equipment becomes the property of the City. The term of the contract will be five years, ending September 30, 2001. Commissioner Hooper questioned on page 2 of the agreement the definition of gross receipts and questioned if deposits are refunded. Deputy City Manager Kathy Rice indicated deposits are considered "earned" when they are accrued. Commissioner Hooper questioned if the City should see anything in the agreement between Boston Concessions Group and Delectables Catering. GFS Harborview General Manager Barry Strafacci said GFS has the right of approval of that agreement and will review it. Commissioner Hooper referred to page 15, subparagraph 1=(2), and expressed concern the sale of tobacco is permitted. Ms. Rice indicated this language allows cigar conferences and exhibits. Smoking will not be allowed in the facility. GFS Corporate President Mich Sauers said vendors may sell tobacco products and the City will receive a commission from those t sales. Mr. Strafacci said the Center's rules and regulations clearly indicate no smoking is 'allowed in the building. Commissioner Hooper questioned if the liquor license, currently held by the City but being assigned to the caterer, could be used off-site. It was indicated the liquor license would only be used on-site. The caterer is not prohibited from holding a separate liquor license for use in another location. Commissioner Johnson questioned who is Boston Concessions Group. Mr. Sauers said the company is well established and has been providing food service and catering for more than 20 years. Commissioner Johnson questioned the role of Delectables Catering in the contract. Mr. Sauers said GFS wanted local people involved, but Delectables Catering did not have the buying power Boston Concessions Group has. Mr. Strafacci said the two organizations fit well. He said GFS had encouraged the "marriage" of the two firms. Commissioner Johnson expressed concern regarding the increase in expenses. Mr. Strafacci said while the management fee is slightly higher, there will be a savings in operating costs. He felt the City would be better off "at the end of the day." Commissioner Seel questioned the change on page 5, subsection D, that provides the General Manager the right to request the dismissal of an employee for drinking alcoholic beverages or using illegal substances, rather than the fight to dismiss. The City Attorney said she had requested this change because the City should not be in the position of being the catering staff's employer. Commissioner Seel questioned If a clause could be lqmxI msp04.96 2 04/08/96 added for the City to review the staffing plan. Ms. Rice said while the City could review it, she recommended the General Manager have the final say. Mr. Sauers said the contract provides an overview of expenses, if that is of concern. Further discussion ensued regarding the desire to view and/or approve the staffing plan. Consensus was on page 18, subsection J, to, add a staffing report and associated budget to the reports the operator is required to submit to GFS. Commissioner Seel questioned the service to be provided on the facility's first floor. Mr. Strafacci said Pickles Plus has the first right of refusal for services to be provided on that floor. In this contract, the caterer is asked to cover any first floor event Pickles Plus chooses not to handle. Ms. Rice reiterated the caterer will handle all alcoholic beverage service. Commissioner Seel referred to page 14, subsection D, and questioned the accounting year basis to be used in determining the share of profits. To clarify the language, the City Manager suggested adding the last sentence in subsection C, "This shall be paid on an accrual basis with generally accepted accounting principles" to subsection D. Commissioner Seel referred to the contractor's option to terminate on page 16 and questioned who pays the deficit should this option be exercised. The City Attorney indicated Boston Concessions Group and Delectables Catering would pay the deficit plus any additional deficit that accrues within the 60 day notification period. Commissioner Seel referred to page 18, subsection J, and questioned why "source t... of revenue" was deleted from the types of required reports. Mr. Strafacci said the contract was based originally on a different commission structure. GFS is comfortable they will receive the information they need from the delineated reports. Commissioner Clark questioned if Pickles Pius will be able to sell alcoholic beverages. Ms. Rice said Pickles Plus cannot serve alcoholic beverages when they cater the first floor facility but can serve alcoholic beverages within their leased premises. Commissioner Clark questioned who would be the on-site manager for Boston Concessions Group. Mr. Strafacci said GFS will have the right of approval of these people. Commissioner Clark referred to the proposed 8% upfront fee to the caterers and expressed concerns they would not be sharing the risk with the City. Commissioner Seel also expressed concern, stating she had done some reading over the weekend and industry standards indicate the City would be fortunate to get 36%. Mr. Strafacci said he has spoken with many industry people and this contract is well within the range. He said more had increased their earnings with this type of rate structure in their concession contracts. Mr. Sauers said comparing this facility with others is not realistic. He noted the Harborview Center is not a major facility and has some unique features. He said this contract was structured based on bids received. He emphasized GFS would not recommend this contract if they did not think it was a good deal. He said Boston Concessions Group has responded to concerns and are good business people. Mr. Strafacci said it was difficult to attract bidders in light of the conflict with Pickles Plus and 1"1/ msp04.96 3 04/08/96 -"? the size of the exhibit hall. He said he telephoned people to request their response to the bid. He emphasized this caterer is being asked to build the business, provide quality service, and to be sensitive to local groups requesting discounted rates. He noted if the caterer does not produce, the GFS contract also will be in jeopardy. Mr. Sauers felt Boston Concessions Group still has an incentive to perform. He felt the deal has some limitations but its goal is to drive the gross revenues as much as possible while controlling expenses. Mr. Strafacci reemphasized there is no business at the current time. He suggested after the facility is established in five years, the fee basis could be flipped to the bottom line. Commissioner Clark questioned who was building the business. Mr. Strafacci said that was being done jointly by the caterers and GFS. Mr. Sauers reported the contracts for approximately 55 events have not been signed in anticipation of identifying the caterer. He said this will be a team effort. He reemphasized if the caterer does not deliver, GFS will be in trouble. And if GFS does not deliver, the caterer will be in trouble. He indicated the City still needs to complete construction of the catering kitchen. In response to a question regarding the operating deficit, Mr. Sauers indicated this will be the caterer's responsibilities throughout the contract. The Commission recessed from 1:41 to 1:48 p.m. Fred Thomas spoke in opposition to the contract stating the City is giving the E .w xj caterer $5-million in infrastructure and they are getting a guaranteed pre-tax bottom line of 8%. He questioned what materials will have to be appreciated and what will be acceptable breakage and acceptable loss. In response to a 'concern expressed by Mr. Thomas that the City Manager opposed the contract, the City Manager indicated now that controls on staffing are included in the contract, she is more comfortable. She stated she still is concerned regarding expenses but is relying on the expertise of GFS. Mr. Thomas recommended the Commission take a "time-out" period and continue with the temporary catering contract with Marriott. He stated whoever gets the contract should be giving 20% off the top to the City when catering revenues are from $1-million to $1.5-million, 25% when revenues are $1.5-million to $3-million, and 30% for revenues above $3- million. Commissioner Johnson requested that Mr. Strafacci and Mr. Sauers respond to Mr. Thomas` comments. Mr. Sauers indicated the facility cannot come to closure on contracts because they do not know who the caterer will be. He said to roll Marriott over for additional time, is not in the facility's best interest. He agreed the investment is substantial an the part of the City. He said while they would prefer a better deal, no one is lining up to enter into this contract with the City. He emphasized the building has great attributes but also some deficiencies. He noted the columns in the building pose problems and the lack of parking also is a detriment. He reviewed the history of the contract and said his believes GFS has done what the City Commission requested. He stated he did not feel a better deal could be obtained by going back out for bid. Mr. Strafacci said during the negotiations, GFS did ask for a commission based contract but 18% was the best they msp04.96 4 04/08/96 4 could get. He said they currently receive 8% from Marriott. He' noted complaints regarding the lack of flexibility in the charges from Marriott. Ms. Rice indicated problems also have occurred with conventions that only want water or coffee service as Marriott will not provide coffee service alone. Commissioner Clark questioned who made the 18% offer. Mr. Strafacci indicated Delectables Catering made that offer. Commissioner Hooper expressed concerns regarding upfront dollars. He stated he was opposed to Harborview in the beginning but now that it is in place, it falls on the City Commission to make it successful. He said he assumes GFS wants to be successful and enter into a long term relationship with the City. He said Harborview Center will not go anywhere unless the City Commission "gets off stop." He stated therefore, reluctantly, he would vote to approve this contract. Commissioner Hooper moved to award the Food and Beverage Services contract for the Harborview Center to Boston Concessions Group, Inc., from April 8, 1996 to September 30, 2001. The motion was duly seconded. Mayor Garvey said she echoed Commissioner Hooper's comments. Upon the vote being taken, Commissioners Johnson and Hooper and Mayor Garvey voted "Aye"; Commissioners Clark and Seel voted "Nay." Motion carried. ITEM !#3 (C nt'd from 04!041995 Res. #96-31 - Requesting Florida Division of Alcoholic Beverages and Tobacco to issue a special license for alcohol consumption on- premises only to the Harborview Center, and requesting transfer of said license to the Facilities Caterer; rescinding Res. #96-18 The City Attorney reported had the City applied for the alcoholic beverage license and received it under the City's name, the transfer to the caterer would take 4 - 6 months. The City Attorney presented Resolution #96-31 and read it by title only. Commissioner Johnson moved to pass and adopt Resolution #96-31 and authorize the appropriate officials to execute same. The motion was duly seconded and upon roll call, the vote was: "Ayes": Johnson, Clark, Hooper, Seel and Garvey "Nays": None. The City Manager reported a letter has been prepared to the Pinellas delegation supporting funding of the Memorial Causeway Bridge and asked the Commissioners to msp04.96 5 04/08/96 i .e f sign it. She said the legislature is also considering a bill that would allow reimbursement for projects in the State road system. She said a letter also was being prepared in support of that. ITEM # 4- Adjournment The meeting adjourned at 2:05 p.m. ATTEST: __C. ity Clerk i b msp04.96 6 Mayor 04108 /9 6