Platinum Hospitality Group Facility Management AgreementCITY OF DUBUQUE, IOWA
MEMORANDUM
May 3, 2001
TO:
FROM:
SUBJECT:
The Honorable Mayor and City Council Members
Michael C. Van Milligen, City Manager
Facility Management Agreement with Platinum Hospitality Group, LLC
I respectfully recommend Mayor and City Council approval of an amendment to the
Mississippi River Education and Conference Center Facility Management Agreement
with Platinum Hospitality Group, LLC to remove management of the parking facility and
place that responsibility with the City of Dubuque.
MCVM/jh
Attachment
CC:
Michael C. Van Milligen
Barry Lindahl, Corporation Counsel
FACILITY MANAGEMENT AGREEMENT
THIS FACILITY MANAGEMENT AGREEMENT (the "Agreement") is made and entered into as of
this __ day of , 2001, by and between The City of Dubuque, Iowa (hereinafter referred to as
"City") and Platinum Hospitality Group, LLC (hereinafter referred to as "Manager").
WITNESSETH:
WHEREAS; the City plans to construct a conference and education center facility located in the Ice
Harbor Urban Renewal District located in Dubuque, Iowa (the "Facility"); and
WHEREAS, the financial and operational success of the Facility is of the highest importance to the
City; and
WHEREAS, the Manager desires the exclusive right and privilege of managing the Facility; and
WHEREAS, The City is unable to provide these services to its attendees and patrons through its own
personnel and facilities and the Manager is experienced and skilled at providing these services;
NOW THEREFORE, in consideration of the premises and of the terms, covenants and conditions
hereinafter contained, it is agreed as follows:
1. Retention of Manager. The City hereby retains the Manager as an independent contractor for the
purpose of performing the management services for the Facility described in this Agreement. "Facility" shall
mean the conference and education center facility and grounds shown on Exhibit A, attached hereto, bnt shall
not include the parking structure at the grade level of the Facility nor any parking structure that is not attached
or affixed to the Facility.
Subject to the terms and conditions set forth herein, the Manager agrees to provide the management
services for the Facility in accordance with this Agreement and consistent with reasonable policies approved by
the City. The Manager shall use its best efforts to maximize revenues in the marketing, operating and
management of the Facility.
2. Management Rights. The City hereby grants to the Manager the exclusive right and license,
subject to the terms and conditions contained herein to:
(a) Operate, manage, market, and arrange programming for the Facility.
(b) Provide and sell, and/or sublicense for the provision and sale of, all food, beverages, souvenirs,
merchandise and printed materials at the Facility. The foregoing shall include the exclusive right to provide and
sell alcoholic beverages.
(c) Provide all services required for the management, use and operation of the Facility, including,
but not limited to, all of those services and matters specifically identified in this Agreement, and excluding only
those matters specifically identified in this Agreement as being the responsibilities of the City.
(d) Charge admission to patrons of all events held at the Facility and to charge for use of the Facility.
3. Capitalization of Facility.
(a) Six months prior to opening of the Facility (the "Capitalization Date"), the City shall provide
$243,949 (the "Capitalization Amount") to capitalize the Manager's Facility Operating Account (the "Operating
Account"). On the one year anniversary of the Capitalization Date, the Capitalization Amount shall be increased
by the CPI-U, up to but not to exceed a three percent (3%) adjustment, and the City shall contribute such increased
Capitalization Amount to the Operating Account. On the second and each succeeding anniversary of the
Capitalization Date thereafter, the City shall contribute an amount (the "Hotel/Motel Amount") equal to 50% of
the actual Hotel/Motel tax generated by the Hotel (adjacent to the Education and Conference Center) in the
previous twelve month period (Fiscal Year defined as the twelve month period beginning on the Capitalization
Date and each anniversary date thereafter).
(b) Six months prior to the opening of the Facility, the City shall, in addition to the Capitalization
Amount, provide and contribute $396,000 (the "Start Up Costs") to the Operating Account to reimburse the
Manager for start up costs associated with opening of the Facility.
(c) In addition to the payment of the Capitalization Amount and Start Up Costs provided for in Section
3 (a) and Section 3 (b) respectively, on the first and second anniversary of the opening date of the Facility, the City
shall contribute to the Operating Account an amount equal to the actual annual operating deficit, as determined by
an accounting firm mutually agreed to by the Manager and the City, of the Facility for the prior twelve (12) month
period (the "Deficit Amount"), less the annual Capitalization Amount payment from the City during that twelve
month period, but not to exceed the immediately prior year Capitalization Amount payment pursuant to paragraph
(a).
The following payment schedule assumes an opening date of January 1, 2002 for the "Facility".
Effective Date Reference
July I, 200I (3a)
July 1,2001 (3b)
January 1, 2002
July 1, 2002 (3a)
February 1, 2003
July I, 2003 (3a)
February 1, 2004
July 1, 2004
and every Julyl
thereafter through
July I, 20II
(3b)
(3a)
Amount and Conditions
$243,949 to capitalize Operating Account
(Capitalization Amount)
$396,000 for start up costs
Opening of Facility for operations
7-1-01 Capitalization Amount times the
CPI-U adj. up to 3% ($251,267.47 max.)
(3b)
Deficit Amount from 1-1-02 to 12-31-02
less 7-1-02 Capitalization Amount
(Deficit Amount to be determined
by Accounting Firm) not to exceed July
1, 2002 Capitalization Amount
Hotel/Motel Amount (An amount equal to 50% of the actual
Hotel/Motel tax generated by the Hotel in the previous 12 month
period).
Deficit Amount less 7-1-03 Capitalization
Amount (Deficit to be determined by
Accounting Firm) not to exceed
July 1, 2003 Capitalization Amount
Hotel/Motel Amount (An amount equal to
50% of the actual Hotel/Motel tax generated
by the Hotel in the previous 12 month
period).
(d) All revenues generated by the Facility shall be deposited in the Operating Account and shall be
subject to the control and direction of the Manager.
4. Management Responsibilities. Except as otherwise provided in this Agreement, all aspects of the
management, use and operation of the Facility shall be the responsibility of the Manager including, without
limitation the following responsibilities:
(a) Subject to Section 3, the Manager shall be responsible for all operating costs and expenses of the
Facility including all costs and expenses incurred in connection with the management, marketing, use,
occupancy and operation of the Facility. The Manager shall prepare and submit to the City Manager,
prior to November 1 of each year, an annual budget for the Facility. The annual budget shall be submitted
to the City Manager for informational purposes and shall not be subject to the approval of the City. The
Manager shall operate the Facility within the scope of the budget or any amendments thereto which the
Manager has previously submitted to the City Manager. The Manager shall have access to and complete
control over the Operating Account and shall use such funds in the Operating Account to pay operating
costs and expenses of the Facility.
(b) The Manager shall operate and conduct all operations of the Facility with the objective that all
persons who patronize the Facility shall be treated in an orderly, safe and courteous manner.
(c) The Manager shall act in accordance with prevailing industry standards to prevent any nuisance
or hazardous activity to occur at, on, about or within the Facility. The Manager shall take all reasonably
necessary action consistent with industry standards to ensure that employees, performers, vendors, lessees,
subcontractors or any other persons utilizing, occupying or patronizing the Facility, shall not engage in
any activity that may cause reasonably foreseeable damage to the Facility or persons.
(d) The Manager shall be solely responsible for safety, security and maintaining good order within
the Facility at all times. The Manager shall take and shall cause all subcontractors to take commercially
reasonable precautions at all times for the protection of persons and property within the Facility,
including, but not limited to, instructing, maintaining and supervising safety precautions and programs in
connection with the management, use, occupancy and operation of the Facility.
(e) The Manager shall use commercially reasonable efforts to ensure that its personnel and all
subcontractors observe and obey laws in connection with all of their work at or about, or otherwise
involving the Facility.
5. Marketing Responsibilities. The Manager shall direct all marketing activities. The Manager
shall develop and implement a promotional plan for the Facility that shall be submitted to the City, for information
purposes only, within 120 days after the date the City provides to the Manager evidence of funding for the
construction of the Facility. The plan shall be reviewed and updated by the Manager and submitted to the City
Manager once each year. The plan shall be submitted to the City Manager for informational purposes and shall
not be subject to the approval of the City. The City agrees to cooperate with the Manager to obtain the support of
the Chamber of Commerce Convention and Visitors' Bureau in the marketing of the Facility, including, without
limitation, the commitment of the Visitors' Bureau to provide at least one senior marketing person dedicated to
marketing the Facility to national and regional groups in cooperation with all local hotels and attractions.
6. Scheduling Responsibilities. The Manager shall develop and maintain all schedules for events
held at the Facility and shall be accomplished in a manner to maximize the use of the Facility. The Manager shall
use an event rental agreement acceptable in form to the City. The Manager is authorized to negotiate rental
agreements for the Facility.
7. Employee Management Responsibilities. The Manager shall have the following responsibilities
with respect to the management of the staff and employees of the Facility:
(a) The Manager shall have sole responsibility for, and the sole right to control and supervise its
personnel and subcontractors, including all of the means, methods, details and other aspects of the
management, use and operation of the Facility, to the extent this Agreement does not provide otherwise.
(b) The Manager shall determine staffing needs for the operation and management of the Facility
and shall be responsible for providing personnel to fulfill such positions and shall determine the terms and
conditions of their employment/engagement and shall be responsible for paying all compensation and
benefits.
(c) The Manager shall assign an operation manager to oversee the services to be provided under this
Agreement. The operation manager shall be capable of and responsible for assuring the integrity of the
services provided by Manager as required by this Agreement. The Manager shall promptly notify the City
Manager of the selection of the operation manager of the Facility.
(d) The Manager shall employ, train and supervise all personnel who will be providing any services
by the Manager in connection with the purposes of this Agreement. All such personnel shall have
appropriate qualifications and experience and be in sufficient numbers to provide all services for the
operations under this Agreement.
(e) The Manager shall address all employee training needs and conduct regularly scheduled training
programs for the personnel who will be furnishing services for the Facility.
(f) The Manager shall take reasonable steps and shall direct all of its employees and subcontractors
to at all times present a neat and attractive appearance, to be courteous, efficient and properly trained, and
not to use improper language or act in a loud or boisterous manner.
(g) The Manager shall be responsible for providing all personnel necessary to set up, operate, and
clean the Facility.
(h) The Manager agrees, represents and warrants that it will not at any time discriminate against any
employee or subcontractor, or against any invitee or other person or entity whatsoever, because of race,
creed, color, religion, sex, age, national origin, disability, or status as a disabled veteran. The Manager
shall post in conspicuous places within the administrative offices at the Facility, which shall be available
to employees and applicants for employment, notices setting forth the provisions of the nondiscrimination
clause required by this Paragraph. In all solicitations and advertisements for employment placed by or on
behalf of the Manager, the Manager shall state that it is an equal opportunity employer.
(i) The Manager shall pay to the appropriate authority for all Federal, State, local and other payroll
taxes, workers' compensation insurance, employer's portion of State and Federal unemployment
compensation taxes, social security taxes, and, at the Manager's discretion, to eligible employees and
independent contractors, accident and health insurance, life insurance, and retirement benefits for all
employees affiliated with the operation of the Facility.
8. Operational Maintenance Responsibilities. Except as provided below, the Manager shall have
the following responsibilities with respect to the operational maintenance of the Facility:
(a) The Manager shall repair, replace, clean, paint and provide normal day-to-day maintenance and
repair as necessary to all equipment and leasehold improvements located in the Facility.
(b) The Manager shall deposit in receptacles provided by the Manager all waste, garbage and refuse
which shall accumulate in the Facility and shall keep the Facility in a good, clean and sanitary condition.
Foodservice trash and garbage removal from or generated by the Facility shall be the sole responsibility of
the Manager.
(c) The Manager shall provide all routine day to day custodial and ordinary maintenance services
required to maintain the interior and exterior of the Facility in good, safe, clean and sanitary condition
and order throughout the term of this Agreement. The City shall be responsible for all replacement,
repair and other maintenance of the interior and exterior of the Facility. The Manager shall promptly
notify the City of any need, known to the Manager, for the repair or replacement of any defect,
malfunction or other inadequacy in the Facility, including the structure, interior, exterior and any capital
improvements regardless of who has financial responsibility for the repair or replacement of such.
Ordinary maintenance and individual repairs costing less than $1,000 shall be made by the Manager up to
an aggregate in any fiscal year of $15,000. The City shall be responsible for repairs or maintenance in
excess of $1,000 individually and $15,000 in the aggregate in any fiscal year. The Manager shall prepare
a rolling five year capital improvement budget for the Facility and make a recommendation to the City
Manager and the City shall fund and make the capital improvements as approved by the City Council in
the capital improvement budget.
(d) The Manager shall keep in force all maintenance and service contracts including but not limited
to telephones, fire extinguishers, air conditioners, Simplex clocks, fire alarm system and sprinkler system.
The City shall cooperate with the Manager to provide the Manager with the benefit of any maintenance or
service contracts the City may be a party to.
(e) The Manager shall maintain a schedule of all needed repairs known to the Manager including
capital improvements and/or replacement. Said schedule shall be provided to the City Manager not later
than November 1 annually._
(f) Except as otherwise provided in this Agreement, the Manager shall be responsible for all
financial affairs, other than debt service= of the Facility, and all services related to the marketing,
management, use and operation of the Facility, including without limitation, sales and use taxes, licenses,
costs of all events, professional services involving Facility operations; and all budgeting, accounting and
reporting systems required by this Agreement and the generation of all required financial reports detailing
revenues and expenses. Notwithstanding the foregoing, the City shall (i) be responsible for all exterior
maintenance and all property, casualty and liability insurance related to the Facility, and (ii) share equally
with the Manager all electric, gas and power expenses related to the Facility and the at grade parking
structure.
(g) The Manager shall not do, or cause to be done, anything which will interfere with the
effectiveness or accessibility of any utility connections or service in, at or about the Facility, including, but
not limited to, water, electricity, telephones, waste and sewage disposal, heating, ventilation and air
conditioning, fire and security monitoring systems, or any portions of the foregoing without prior written
approval of the City, which shall not be unreasonably withheld. The Manager shall not do or cause to be
done anything that would unreasonably interfere with free access and passage in the Facility and the
adjacent and adjoining public areas, streets, parking lots and sidewalks.
9. Food Product Management. The Manager shall have the following responsibilities with respect
to the food product management of the Facility:
(a) The Manager shall manage all appropriate food and beverage requirements necessary to fulfill
the purposes of this Agreement.
(b) The City shall not be responsible for any goods, food, beverages, merchandise or equipment
stored at the Facility by third parties, nor will it be responsible for damages resulting from a power failure, flood,
fire, explosion and/or other causes which result in the damage or destruction of the foregoing items, other than for
gross negligence or intentional misconduct on the part of the City or its employees, agents or legal representatives.
(c) During all events at the Facility where there are concession sales, the Manager shall post signs
and provide menus advertising the prices of all items offered for sale.
10. Operation Plan. The Manager shall at least annually develop and submit to the City and at all
times have in effect an operation plan ("Operation Plan") which provides for the guidelines and usage of the
Facility by the Manager, control of the services being provided by the Manager and other such matters as necessary
to fulfill the purposes of this Agreement. The Operation Plan shall cover and include but not be limited to the
following matters:
P. Maintenance, repair, replacement and usage of the equipment and leasehold improvements.
B. Prices of the food, beverages and services being provided at the Facility.
Q. Menus and items offered for sale.
D. Use of equipment and leasehold improvements.
E. Rules and regulations relating to the sale and distribution of food and beverages.
F. Sponsorship, advertising and promotion of the Facility and the services being provided pursuant
to this Agreement.
G. The method, type and form of the financial records to determine the payments to be made by the
Manager under this Agreement.
H. Usage of "logos", on menus, cups, napkins and the like used in conjunction with the providing of
food and beverage for an event.
I. Sanitation and cleaning guidelines.
J. Off-site sales of food and beverages in conjunction with an event.
K. Scheduling the usage by the Manager of the Facility or any of its facilities.
L. Crowd control.
M. A dress code and training program for the Manager and Facility employees providing food,
beverages and other services, as well as staffing guidelines for each event.
N. Operation Standards.
O. Entrance procedures for employees working an event.
P. Procedures to address revenue sharing and sponsorship opportunities for selected events at the
Facility.
Q. Procedures for selecting contractors and vendors.
11. Improvements. Improvements for the Facility shall be as provided below:
(a) The City shall provide at its sole cost and expense a turn key convention facility that shall
include all equipment necessary for the operation of the Facility, including without limitation, all tables, chairs,
tableware and all other equipment necessary for the operation of the Facility. The City guarantees that the
equipment will be sufficient to provide the services required under this Agreement. The equipment and location
for the installation of the same shall be mutually agreed upon by the City and the Manager. Replacement of non-
capital equipment shall be the responsibility of the Manager. For purposes of this Section 11, non-capital
equipment shall mean any non-capital equipment as defined by generally accepted accounting principles.
(b) The City shall be responsible for capital improvements to the Facility. Capital improvements
shall be expenditures that are of a long-term character and as defined by generally accepted accounting principles.
The Manager shall not later than November 1 annually provide the City Manager with a five year capital
improvement plan that shall propose capital improvements of the Facility.
(c) The Manager shall not permit any waste, injury, or damage upon or to the Facility, ordinary wear
and tear excepted. At the expiration of this Agreement, the Manager shall leave the Facility in at least the same
condition that existed at the commencement of this Agreement, ordinary wear and tear excepted. All equipment
shall be the property of the City at the termination of this Agreement.
(d) The Manager shall not, without the prior written approval of the City, remove or cause to be
removed or permit the removal of, or from the Facility any property provided by or belonging to the City, except
for ordinary and necessary repairs.
(e) The Manager shall not install or remove or cause or permit, (unless permitted by the City) the
installation or removal of any fixtures, partitions, equipment, furnishing, or other property where to do so will
deface, injure or damage the floors, walls, ceilings, or any portion of the Facility or property connected or adjacent
thereto. The Facility shall not cause or allow any structural alterations or physical modification in or to the
Facility without having obtained prior written approval from the City. Such approval may be conditioned upon the
Manager's express, written agreement to return the same to its original condition immediately following the use or
purpose for which any such change or alteration has been made. Any such approval by the City to a particular
alteration or change shall not be deemed a consent to any other or additional alteration or change at that time or
thereafter unless specifically so stated in the advance written approval executed by the City.
12. Permits, Licenses. Taxes. The Manager shall apply, procure and pay for and maintain all
permits and licenses that are required or necessary for the management, use, occupancy or operation of the Facility.
The City shall fully cooperate with the Manager with its efforts as they relate to licenses and permits and shall
execute any and all agreements, instruments and documents and take such actions to accomplish these purposes.
The Manager, if required, shall charge, collect and pay over to the appropriate taxing authority, all applicable taxes
due as a result of the performance of the Manager's duties under this Agreement, including but not limited to Iowa
Sales and Use taxes on admissions, if any. The Manager shall cause a statement substantially similar to the
following to be included in all written agreements entered into after execution of this Agreement, with third parties
to which the Manager is a party with respect to the Facility: "Vendor agrees that it shall look solely to the
Manager for all claims and damages arising out of this Agreement, and that it shall have no recourse against the
City or any of its employee& agents', officers or officials' with respect to any claims or damages arising under this
Agreement."
13. Term and Termination. The term of this Agreement shall be for a ten year period commencing
six (6) months prior to the date of the opening of the Facility (the "Commencement Date"). After the first three
years of the operation of the Facility, this Agreement may be terminated by either party hereto, without cause, upon
six (6) months notice to the other party. Either party shall have the right to terminate this Agreement upon sixty
(60) days notice in the event of a material breach by the other party, provided the party receiving the notice shall
have thirty days (30) from receipt of the notice to cure the default. Upon termination, all obligations of the parties
hereunder shall cease.
14. Operating Profit. The Manager shall be entitled to retain and pay itself from the "Operating
Account" at the end of each 12 month period beginning with the first anniversary date of the opening of the
Facility, any profits or income from the Facility in excess of the expenses of the Facility as determined by an
accounting firm mutually agreed upon by the Manager and the City.
15. Inspections. Upon reasonable prior notice to the Manager, the City shall have the right to enter
the Facility at all reasonable times for the purpose of determining whether the terms, covenants and conditions
contained in this Agreement and the Operation Plan are being fully and faithfully observed and performed.
16. Records. The Manager shall maintain books and records for the services provided under this
Agreement and said books and records shall be open for inspection by the City or its designated representative at
reasonable times during the term of this Agreement and for a period not to exceed three (3) years thereafter. The
Manager shall provide the City with sales records, bank deposit receipts, cash register receipts, banquet contracts,
banquet deposits, final banquet invoices and other accounting forms reasonably requested by the City.
17. Indemnification. The Manager hereby agrees to indemnify, defend and hold harmless the City
and its officers, commissioners, employees, agents, servants or representatives from and against any and all claims,
demands, damages, liabilities, actions, judgments, or execution of third parties of any kind or nature whatsoever,
whether at law or in equity, including, but not limited to, reasonable attorney's fees and court costs, arising out of,
relating to, resulting from, or caused by the negligence or willful misconduct of the Manager, its officers,
employees, agents, servants, subcontractors or representatives during the term of this Agreement. The Manager
shall be given prompt notice of any claims for which the indemnification will be sought, and shall be given full and
complete cooperation from the City in the defense or settlement of all such claims, and shall be given full authority
in the defense or settlement of any such claims, with the exception of claims which relate to City reimbursement
responsibilities. Neither party shall have the authority to bind the other to any settlement without such party's prior
written consent, which consent shall not be unreasonably withheld, conditioned or delayed.
The City hereby agrees to indemnify, defend and hold harmless the Manager and its officers,
commissioners, employees, agents, servants or representatives from and against any and all claims, demands,
damages, liabilities, actions, judgments, or execution of third parties of any kind or nature whatsoever, whether at
law or in equity, including, but not limited to, reasonable attorney's fees and court costs, arising out of, relating to,
resulting from, or caused by the negligence or willful misconduct of the City, its officers, employees, agents,
servants, subcontractors or representatives during the term of this Agreement.
18. Insurance. The Manager shall obtain and maintain, pursuant to the annual budget for the
Facility, the insurance as set forth in the attached Schedule in such amounts as the parties shall mutually agree.
The Manager shall recommend specifications and submit a plan annually as part of the budget process, to the City
for approval. The City shall be responsible for the cost of all property, casualty and liability insurance related to the
Facility and shall pay any and all property, casualty and liability insurance premiums related to the Facility.
19. Miscellaneous.
(a) The Manager shall not use or permit to be used any property of the City other than for its intended
purpose.
(b) This Agreement and the Exhibits attached hereto embodies the entire Agreement between the City
and the Manager, and there are no other representation, promises, agreements, conditions or understandings, either
oral or written, between the City and the Manger other than as set forth in this Agreement.
(c) No subsequent alteration, amendment, change or modification to this Agreement shall be binding
upon any party unless in writing and signed by the party to be charged, which writing must expressly refer to the
fact that it is altering, amending, changing or modifying this Agreement.
(d) Any and all changes, modifications or amendments to this Agreement may only be made jointly by
the City and the Manger. Any and all such changes shall be subject to the approval of the Mayor and City Council
of the City of Dubuque.
(e) By entering into this Agreement, none of the parties hereto intend to create, nor shall this Agreement
be deemed or construed as creating, any partnership, joint venture, agency or other legal relationship between the
City and/or the Manager, other than that of the City as owner, and the Manager as independent contractor.
(f) This Agreement is not intended by any of the provisions hereof to make any person or entity not a
party to this Agreement a third party beneficiary hereunder, and is not intended to benefit any such third party.
(g) This Agreement shall be governed by the laws of the State of Iowa. The City and the Manager
expressly submit themselves to the jurisdiction of the Courts of the State of Iowa.
(h) The Manager shall not transfer or assign this Agreement nor the rights, privileges or premises
granted under this Agreement in whole or in part to any other person, firm or corporation, without the prior
written consent of the City.
(i) The City's representative for purposes of this Agreement is its City Manager and the Manager's
representative is its President.
(j) The Manager shall, upon the expiration or earlier termination of this Agreement, for any reason,
peacefully surrender to the City possession of the Facility, and the Manager shall forthwith remove all of its
property from the Facility. Unless the City has agreed otherwise, the Manager shall forthwith return the Facility to
the same condition it was upon the commencement of this Agreement, reasonable wear and tear excepted for
repairs which the Manager is not obligated to make pursuant to this Agreement.
(k) City reserves the right to name the Facility.
IN WITNESS HEREOF, the parties hereto have executed this Agreement as of the day and year first
above written.
CITY:
City of Dubuque, Iowa
MANAGER:
Platinum Hospitality Group, LLC
By: By:
Its: Its: