TITLE
Recommendation to authorize an advance of payment expected to be owed under Management Agreement No. 21667 to ASM Global for operational expenses at the Long Beach Convention and Entertainment Center due to COVID-19 impacts. (District 2)
DISCUSSION
Due to COVID-19 related economic impacts and state and local operating restrictions, the Long Beach Convention and Entertainment Center (Convention Center) has experienced a major reduction in events and operations. The resulting loss of operating revenue at the Convention Center has severely impacted cashflow available for even minimal maintenance and operation at the center. Due to these unique and expected temporary service disruptions, it is anticipated that the Convention Center will not have enough cash on hand to maintain operations by the end of July 2020.
ASM Global (formally SMG) (ASM) operates the Convention Center under contract with the City. ASM has taken measures to minimize operating costs at the center. Staffing has been reduced to 15 positions, and major systems at the Convention Center are run at minimal capacity. The central plant at the Convention Center must remain operational as it supports utilities at the center and at the Hyatt Long Beach. Additionally, staff must provide maintenance and security at the center during the COVID-19 pandemic shutdown.
Under the Management Agreement (Agreement), which governs the ASM operation of the Convention Center, ASM must remit a portion of the profits to the City of Long Beach (City). The Tidelands Fund normally receives approximately $500,000 annually from Convention Center profits. However, per the Agreement, when operating expenses exceed operating revenue for the fiscal year, the City must reimburse ASM for this operational deficiency. This fiscal year (FY 20), the amount that will be owed to ASM is estimated at $4.7 million. Per the Agreement, this payment will be due to ASM in December after the audited financial statements are co...
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