STRATEGIC PRIORITY: Quality of Life, Arts & Culture
AGENDA DATE: November 13, 2024
COUNCIL DISTRICT(S): 7
DEPARTMENT: Park & Recreation Department
EXECUTIVE: John D. Jenkins
______________________________________________________________________
SUBJECT
Title
Authorize the (1) third amendment to extend the lease and use agreement between Fair Park First and Live Nation Worldwide for an additional ten years, plus two additional five-year extension options; (2) receipt and deposit of funds Live Nation Worldwide in an amount not to exceed $1,000,000.00 in Fair Park Surcharge & Excess Revenues Fund; (3) establishment of appropriations in an amount not to exceed $1,000,000.00 in the Fair Park Surcharge and Excess Revenues Fund; and (4) transfer of funds to Debt Service Fund in an amount not to exceed $1,000,000.00 - Estimated Revenue: Fair Park Surcharge and Excess Revenues Fund $1,000,000.00
Body
BACKGROUND
On December 9, 1987, the City Council authorized a certain Lease and Use Agreement between the City and PACE Entertainment Group, Inc., (PACE) to which the City leased to PACE the Amphitheatre Tract (1) with respect to the Parking Tract, a non-exclusive, irrevocable right of ingress and egress on the over same and the irrevocable right for a certain period to use the same for parking of motor vehicles, (2) with respect to the Assigned Parking Area, the exclusive irrevocable right to use the same for the parking of motor vehicles, and (3) with respect to the Coliseum Lots, the non-exclusive, irrevocable right to use all or a portion of the same for parking of motor vehicles in accordance with the terms of the Agreement by Resolution No. 87-3928.
On June 14, 1989, the City Council authorized the first amendment to the lease and use agreement between HOB Concerts/PACE Amphitheatres Group, L.P. (formerly known as MCA/PACE Amphitheatres Group, L.P.) and the City for the use of the City’s Amphitheatre Tract to further the year round operation of Amphitheatre and the enhancement, development and improvement of Fair Park as a public entertainment facility, tourist attraction, campus for cultural facilities and public park by Resolution No. 89-0327.
On June 17, 2015, the City Council authorized a second amendment to the lease and use agreement (“Agreement”) between Live Nation Worldwide, Inc. hereinafter referred to as "Live Nation" (formerly known as MCA/PACE Amphitheatres Group, L.P. and Pace Amphitheatres Inc.) and the City of Dallas, in accordance with the following terms: (1) to the extent Live Nation elects to undertake the improvements up to $8,000,000.00 as described in the Second Amendment, and in consideration of Live Nation’s design, construction, and performance of the Improvements and securing financing, the City hereby agrees to reduce the total annual rent due and payable to City under the Agreement for the amount equal to or the lesser of (i) the actual costs of the Improvements (Project Costs) or (ii) $6,500,000.00 (such reduction to the rents due is the “Rent Credit”), upon recovery of all of the Rent Credit, Live Nation shall resume all of the rental obligations under the Agreement; the Rent Credit will be taken in annual installments of $500,000.00 annually (subject to only adjustment for any carry forward deficiencies resulting from the lack of total rent payable or available) credited by City against the rents payable by Live Nation until the full amount of the Rent Credit is realized; (2) increase the current “Additional Rental”, as defined in the agreement, from $.15 per sold admission ticket to $.20; and (3) exercise their second ten-year option, extending the agreement through December 31, 2028; (4) guaranteed annual rent to increase on January 1, 2017 to $500,000.00 per year and to increase on January 1, 2023 to $550,000.00 per year; and (5) all categories and tranches of percentage rent to increase on January 1, 2017 by .5 percent by Resolution No. 15-1260.
On October 24, 2018, the City Council authorized the Fair Park management agreement with Fair Park First (Management Agreement). Under such Agreement, the Live Nation contract was assigned to Fair Park First to manage. Pursuant to the Management Agreement, Fair Park First is authorized to negotiate leases in excess of one year, subject to Park and Recreation Board and City Council approval by Resolution No. 18-1541.
Fair Park First has negotiated a third amendment to the current agreement and seeks approval from the Park and Recreation Board and City Council. The salient terms of the negotiated third amendment include the following:
• Extend the term of the current agreement for an additional 20-year period expiring on December 31, 2048, to commence at the expiration of the second renewal term. Live Nation and FPF are currently in the second renewal term, which said term will expire on December 31, 2028.
• Amendment shall include an additional $2.00 per ticket surcharge to all paid admission tickets sold to all public events at the amphitheater, for the purpose of funding capital improvements to the benefit of Fair Park campus partners
• Any remaining Rent credit will continue through the Third Amendment;
• Amendment shall include two options to terminate the amended agreement
o First Option- Live Nation may, in its sole discretion, elect to terminate the Amended Agreement effective as of December 31, 2038, by delivering written notice exercising such election to FPF no later than September 30, 2037.
o Second Option- Live Nation may, in its sole discretion, elect to terminate the Amended Agreement effective as of December 31, 2043, by delivering written notice exercising such election to FPF no later than September 30, 2042.
• Once officially implemented, the Surcharge will be collected by Live Nation’s ticketing company and remitted directly to the City for deposit and to be administered by the City.
• It is anticipated that Live Nation will have the right to participate in (together with all other Fair Park campus partners), but not approve, park department decisions determining how the fund is utilized at Fair Park.
o The process will mirror the existing State Fair Excess Net Revenue process, which entails agreement on the uses of the funds between Fair Park campus partners through a signed letter to document such agreed determination.
• If a displacement or loss of parking occurs as a result of the construction of the Community Park or the Parking garage as described in the third amendment, Live Nation may receive a parking credit offset against its rental payments owed to FPF.
• The annual Minimum Guaranteed Rental during extended term shall be applicable amounts set forth in the following table
|
Lease Years |
Minimum Guaranteed Rental (per year) |
|
2029 - 2033 |
$605,000.00 |
|
2034 - 2038 |
$665,500.00 |
|
2039 - 2043 |
$732,050.00 |
|
2043 - 2048 |
$805,255.00 |
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
On October 31, 2024, the Park and Recreation Board will consider authorizing (1) the third amendment to extend the lease and use agreement between Fair Park First and Live Nation Worldwide for an additional ten years plus two additional five-year extension options; and (2) establish appropriations in the Fair Park Surcharge and Excess Revenues Fund.
The City Council was briefed by memorandum regarding this matter on November 8, 2024. <https://dallascityhall.com/government/citymanager/Documents/FY24-25%20Memos/November%2013,%202024%20Council%20Agenda%20%20Item%2051.pdf>
FISCAL INFORMATION
Estimated Revenue: Fair Park Surcharge and Excess Revenues Fund $1,000,000.00
MAP
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