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Dubuque Ice & Recreation Center_Non Compete with SMGTHE CITY OF Dubuque au DUB E 1 I Masterpiece on the Mississippi ~~ 2007 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Proposed Amended Non Compete Clause with SMG DATE: September 30, 2009 Leisure Services Manager Gil Spence is recommending approval of a request from Platinum Hospitality to continue the non-compete clause for the Five Flags Civic Center Management contract with SMG related to national political events, but to allow competition in all other areas. I concur with the recommendation and respectfully request Mayor and City Council approval. Mic ael C. Van Milligen MCVM:jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager Gil Spence, Leisure Services Manager THE CITY OF ~ Dubuque '' ~T T~ ~ AN-AmedcaCl~y v Masterpiece on the Mississippi 2007 TO: Michael C. Van Milligen, City Manager FROM: Gil D. Spence, Leisure Services Manager SUBJECT: Amendment to the SMG Management Agreement for the Five Flags Center DATE: September 30, 2009 INTRODUCTION The purpose of this memorandum is to request City Council approval of an amendment to the SMG Management Agreement for the Five Flags Center. DISCUSSION With the opening of the new ice arena and elimination of ice at the Five Flags Center, I am recommending an amendment to the SMG Management Agreement allowing them to compete for the same type of events that can be held at the Grand River Center. When the Grand River Center opened in October 2003 the City agreed that the Five Flags Center would not compete for events that could be held there for afive-year period. The SMG Agreement, Section 2.6(b) (the last two sentences) states, "Notwithstanding anything to the contrary contained herein, the parties acknowledge that the Facility (Five Flags) shall not compete for the same type of events that can be held at the Grand River Center in Dubuque, Iowa, unless the event comes through the Grand River Center. Those events include, but are not limited to: conferences/conventions, dinners/banquets, meetings, receptions, and flat floor events." The amendment would change these two sentences to: "Notwithstanding anything to the contrary contained herein, the parties acknowledge that the Facility (Five Flags) shall not compete for national political events. This change will allow SMG to secure additional events to offset the revenue loss of having no ice in the building. It will take a few years to build an event load of these types of events because many of them are scheduled several years in advance. continued SMG Agreement amendment page two When looking at just the operating budget, SMG projects a net revenue loss of $68,000 with all ice activities eliminated. They figure the first year they can offset this, to some degree, with an increase of other events because of the number of dates freed up from no ice events. This could reduce the net revenue loss to $14,000 the first year and by the third year it could be revenue neutral, or making money. SMT will need to be creative with the events they try to generate and they are already developing a plan for how they will approach this. If the capital improvement budget is included in this discussion, things look even better. If all the capital costs associated with ice are budgeted on an annual basis, I estimate that amount would be $40,000 per year. This capital money would then be freed up for other projects. Revenue generated from the same type of events held at the Grand River Center will not be real great because these types of events do not generate a lot of revenue, unless you prepare the food. They will create good traffic for the building and provide some additional revenue. remind you that any impact will not occur until the Fiscal Year 2011 budget year. Also, we will need assistance from the Convention and Visitors Bureau to market Five Flags to regional and state groups to help create this new business. ACTION STEP The action requested is that the City Council adopt the attached resolution amending the SMG Management Agreement for the Five Flags Center. GDS:et attachment Preparers Gil D. Spence Address: 2200 Bunker Hill Rd Phone: X563) 589-4263 RESOLUTION NO. 392-09 A RESOLUTION APPROVING THE SECOND AMENDMENT TO THE MANAGMENT AGREEMENT BETWEEN THE CITY OF DUBUQUE, IOWA AND SMG. Whereas, the City of Dubuque has identified the need for private management of the Five Flags Center; and Whereas, the City of Dubuque (City) and SMG entered into a Management Agreement on June 21, 2004; and Whereas, City and SMG now desire to amend the Management Agreement by changing the following language in Section 2.6(b) FROM ..." Notwithstanding anything to the contrary contained herein, the parties acknowledge that the Facility (Five Flags) shall not compete for the same type of events that can be held at the Grand River Center in Dubuque, Iowa, unless the event comes through the Grand River Center. Those events include, but are not limited to: conferences/conventions, dinners/banquets, meetings, receptions, and flat floor events" TO ... "Notwithstanding anything to the contrary contained herein, the parties acknowledge that the Facility (Five Flags) shall not compete for national political events. NOW, THEREFORE, BE IT RESOLVED, BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That the Second Amendment to the Management Agreement between the City of Dubuque, Iowa and SMG be approved. Passed, approved and adopted this 5th day of octob~r 2009. ;~~ Roy D. Buol, Mayor Attest: ~ ~ / ~.~eanne F. Schneider, City Clerk GRAND RIVER CENTER TO: Michael C. Van Milligen, City Manager FROM: Mitzi M. Yordy, General Manager Grand River Center SUBJECT: Proposed Amended Non Compete Clause with SMG DATE: September 25, 2009 In response to your recent letter, I am requesting the proposed amended clause to the SMG/Five Flags contract regarding the non compete clause with the Grand River Center have one exception in regards to Political Events. The Grand River Center has had the privilege of hosting multiple Presidential, Vice Presidential and numerous presidential hopeful visits as well as the Democratic Caucus. On behalf of the Grand River Center, I would like to continue the tradition of showcasing Dubuque with our political guests and the community. The recent purchase and installation of the state of the art video system in the Exhibit Hall was added due to the demand from such political events. C-ver the past six years we have been able to build relationships with the organizers of political events and advance teams including White House Communications and Secret Service. My sales team and staff members have gained an expertise in handling their particular needs. Thank you for your time and consideration of this matter. Mitzi M. Yordy cc: Jim Rix, CEO Platinum Hospitality 500 Bell Street, Dubuque, IA 52001 * The Port Of Dubuque Tel: (563) 690-4500 * Fax: (563) 690-1350 Managed by Platinum Hospitality Group, LLC