Memorandum To: Mayor and City Commission From: City
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VI-C-3 FEBRUARY 1, 2021 MEMORANDUM TO: MAYOR AND CITY COMMISSION FROM: CITY ATTORNEY'S OFFICE DATE: February 1, 2021 RE: Agreement with Levy Premium Foodservice Limited Partnership for Concession Services at the RP Funding Center Attached hereto for your consideration is a proposed Agreement with Levy Premium Foodservice Limited Partnership (Levy) for concession services at the RP Funding Center. In February 2020, the City’s Purchasing Department issued Request for Proposal No. 0097 seeking a qualified and experienced food and beverage concessionaire for the RP Funding Center. Due to the significant impact of the COVID-19 pandemic on the event industry, as well as on the RP Funding Center’s business, City staff made the decision to postpone the RFP and negotiate an extension of its agreement with Ovations Food Services, LP, d/b/a Spectra Food Services & Hospitality (Spectra) to facilitate a transition period to a new vendor. The City’s agreement with Spectra expired in June 2020. The City received two (2) proposals in response to the RFP which included Levy from Chicago, IL and Second Plate Catering from Plant City, FL. Upon evaluation by RP Funding Center staff, Levy was selected as the preferred vendor to be the exclusive food, beverage and catering concessionaire for the RP Funding Center. Levy is one of the fastest growing hospitality companies that is well respected for its network of internationally acclaimed restaurants and it is the leading market share operator of premium food service at convention, sports, cultural and entertainment facilities such as Amway Center and Tropicana Field in Central Florida. Pursuant to the Agreement, Levy will be the sole and exclusive provider of all food, beverage and concession business on designated portions of RP Funding Center’s property, while certain special services and City sponsored events will be excluded from Levy’s services. The initial term of the Agreement will be for a period of five (5) years, commencing on February 1, 2021, with one (1) additional five (5) year renewal term upon mutual written agreement of the parties, subject to City Commission approval. The City reserves the right to terminate the Agreement in the event of default by Levy of any terms/conditions in the Agreement, including filing of bankruptcy and material breaches of contract that are not cured by Levy within thirty (30) days of written notice from the City. In addition, the City may terminate the Agreement if sufficient funds are not appropriated by the City Commission for a new fiscal year or if the City Commission makes a determination to close or sell the RP Funding Center. In any such event, the City will be required to pay Levy the unamortized portion of Levy’s capital investment, with the exception of termination of the Agreement due to Levy’s default arising from an intent to defraud the City. However, title to all equipment and assets in the RP Funding Center that are purchased pursuant to Levy’s capital investment shall be owned by the City upon any such termination. In accordance with the Agreement, Levy has agreed to a capital investment of up to $150,000 toward pre-opening costs, development, design, construction, equipping and finishing of the food service facilities at the RP Funding Center during the initial five (5) year term of the Agreement. Pursuant to the Agreement, Levy will be required to submit a written plan within thirty (30) days of execution of this Agreement for its proposed investment expenditures, which shall be subject to prior written approval of the RP Funding Center’s Executive Director. In consideration for the City’s grant of exclusive food and beverage rights and privileges to Levy, Levy will pay the City a percentage of gross receipts (commissions) generated on its concessions’ business during each contract year of the initial term of the Agreement as set forth in the Commission Schedule below. All amounts of gross receipts shall be subject to an annual increase in accordance with the Consumer Price Index. Source Gross Receipts Commission Rate Alcohol $0 - $200,000 35% $200,000.01 - $400,000 42% $400,000+ 47% Catering $0 - $600,000 15% $600,000.01 - $800,000 18.5% $800,000.01 - $1,000,000 21.5% $1,000,000 + 40% General Concessions $0 - $250,000 30% $250,000.01 - $500,000 35% $500,000 + 40% Net Subcontractor All Net Receipts 50% Income & Vending: Catering Supplemental 16.5% Charge Due to the nature of the current COVID-19 pandemic, the Agreement contains an interim financial structure to ensure Levy’s profitability. During this interim period, the parties have agreed that Levy’s minimum annual net receipts shall equal $75,000. If the prorated minimum net receipts for a month have been satisfied, Levy shall then pay the City commissions as set forth in the Commission Schedule above. However, if the monthly net receipts are less than the monthly prorated minimum net receipts, then the City’s total commissions will be reduced by the difference between actual net receipts and minimum net receipts. If the adjusted commissions equal a negative amount, then Levy shall be entitled to withhold future commissions until the minimum net receipts are met. If Levy’s gross receipts from May 1, 2021 through July 31, 2021 are less than 85% of the gross receipts for the same time frame of 2019 (i.e. May 1, 2019 – July 31, 2019) then the interim financial structure specified above will be automatically extended for additional three (3) month periods until such time gross receipts reach a normalized capacity period as set forth in 2019. The City shall be responsible for the cost related to procuring replacement equipment, additional furniture, fixtures and equipment, except to the extent any damage to such replacement property was the result of Levy’s negligence or lack of maintenance. Any such replacement purchases shall remain the property of the City upon expiration or termination of the Agreement. The City will also be responsible for the payment of all utilities, with the exception of telephone usage and long-distance charges, which shall be the responsibility of Levy. In addition, Levy will be required to indemnify and hold harmless the City from any claims, losses or liability related to injury, disease, business interruption and destruction of property to the extent caused by Levy’s negligence or willful misconduct. It is recommended that the City Commission approve the attached Concessions Service Agreement with Levy and authorize the appropriate City officials to execute the Agreement. Attachment MANAGEMENT AGREEMENT BY AND BETWEEN THE CITY OF LAKELAND, AS CITY AND LEVY PREMIUM FOODSERVICE LIMITED PARTNERSHIP, AS MANAGER 1. REPRESENTATIONS ...................................................................................................... 2 2. MANAGEMENT SERVICES ........................................................................................... 3 3. PROJECTIONS OF GROSS RECEIPTS; CAPITAL BUDGET ...................................... 7 4. CONDUCT OF THE OPERATIONS ............................................................................... 7 5. SALE AND DELIVERY OF FOOD AND BEVERAGE ITEMS .................................... 9 6. EMPLOYEES AND AGENTS.......................................................................................... 9 7. LICENSES AND PERMITS ........................................................................................... 10 8. COLLECTIONS AND PAYMENTS OF TAXES AND OTHER ITEMS ..................... 11 9. USE OF FACILITIES...................................................................................................... 12 10. INVESTMENT; MARKETING FUND .......................................................................... 13 11. COMMISSIONS AND INTERIM FINANCIAL STRUCTURE.................................... 14 12. TERM; TERMINATION; DEFAULT ............................................................................ 19 13. INDEMNITY ................................................................................................................... 24 14. INDEPENDENT CONTRACTOR .................................................................................. 26 15. OWNERSHIP IN FOODSERVICE FACILITIES; AUTHORITY OF MANAGER ..................................................................................................................... 26 16. TAXES AND CONTRIBUTIONS .................................................................................. 26 17. QUALIFICATION .......................................................................................................... 26 18. SEVERABILITY ............................................................................................................. 26 19. CONSENTS; WAIVER ................................................................................................... 26 20. REMEDIES...................................................................................................................... 27 21. GOVERNING LAW AND JURISDICTION .................................................................. 27 22. TIME OF ESSENCE ....................................................................................................... 27 23. FORCE MAJEURE; CHANGE OF CIRCUMSTANCES .............................................. 27 24. ASSIGNMENT AND SUBCONTRACTS ..................................................................... 28 25. MODIFICATION OF AGREEMENT ............................................................................ 29 26. HEADINGS ....................................................................................................................