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HomeMy WebLinkAboutHuntington Beach Marketing and Visitors Bureau - HBMVB - Previously known as Huntington Beach Conference and Visitors Bureau - HBCVB - 2009-05-18LOAN AGREEMENT THIS LOAN AGREEMENT (hereinafter referred to as the "Agreement") is made this �0 day of J/jie, 2009 by and between HUNTINGTON BEACH CONFERENCE AND VISITORS BUREAU (hereinafter referred to as "Borrower" or HBCVB) and the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body of the State of California (hereinafter referred to as "Agency"). RECITALS WHEREAS, the Huntington Beach Conference and Visitors Bureau (HBCVB) represents hotel conference properties within the Redevelopment Project Area of the Huntington Beach Redevelopment Agency, including the Hilton Waterfront Beach Resort, the Hyatt Regency Huntington Beach Resort and Spa and the Shorebreak Hotel which have all been severely challenged by the cancellation and postponement of conference and business meetings; and The HBCVB funding is funded in part by 1% of the City's Transient Occupancy Tax and 1% Huntington Beach Hotel Business Improvement District assessment on hotel stays in Huntington Beach. Because hotel revenues are down by the same 21.9% (the Bureau estimates a total revenue decline of more than $237,000 for this 2008/09 fiscal year) HBCVB's funding sources have also declined; and Hotels within the Redevelopment Project area in need of financial assistance to conduct marketing campaigns to draw visitors to Huntington Beach thereby furthering continued economic development within the Merged Redevelopment Area; and The Conference and Visitors Bureau would like to borrow money from the Agency to initiate an immediate and extensive Meetings Marketing Campaign to promote Huntington Beach to the business meetings market. The Loan amount would be part of a $79,800 Meetings Marketing Campaign. NOW,. THEREFORE, for good and valuable consideration the parties agree as follows: 1. LOAN BALANCE AND REPAYMENT. Agency will loan to Borrower (the "Loan") an amount not to exceed fifty -thousand ($50,000.00) provided no Event of Default and no event which, with notice or passage of time or both, would constitute an Event of Default has occurred. All Loan obligations will bear 2% simple interest. Said loan obligation shall be repaid in yearly installments as set forth in the Promissory Note. Yearly loan payments will be made on or before July 31, 2010 to July 31, 2014. Notwithstanding any other provision of this agreement, in the event the loan amount is not paid on or before thirty (30) days prior to due date, a charge of 2% will be added to the then current amount due as a penalty. Every week the amount is not paid, an additional 5% will be added to the new amount due. In the 09-2069/35716 1 event the outstanding yearly amount is not paid in 3 months after its due date as defined above, this agreement will terminate and the remaining balance plus penalties shall be due. City may initiate collection procedures and recover any identified assets as described herein, including retaining any TOT payments then due and continuing until the debt is paid. All payments to Agency shall be directed / mailed to P.O. Box 711, Huntington Beach, CA 92647. 2. NAME; PLACES OF BUSINESS. The name of Borrower set forth in this Agreement is its true and correct name. Borrower shall provide Agency 15 days prior written notice before changing its name. In addition, the address set forth in this Agreement is Borrower's base office. Borrower will give Agency at least 15 days prior written notice before changing its base office. 3. SECURITY INTEREST. As security for all present and future indebtedness, guarantees, liabilities, and other obligations, of Borrower to Agency, Borrower hereby grants Agency a continuing security interest in any of Borrower's interest (if such interest exist) in the following types of property, whether now owned or hereafter acquired, and wherever located (collectively, the "Collateral"): All "accounts," "general intangibles," "contract rights," "chattel paper," "documents," "letters of credit," "instruments," "deposit accounts," "inventory," "investment property," `fixtures" and "equipment," as such terms are defined in Division 9 of the California Uniform Commercial Code in affect on the date hereof, and all products, proceeds and insurance proceeds of the foregoing. In addition, Borrower grants to the Agency rights to any and all Transient Occupancy Tax Revenue (TOT) pledged by the City of Huntington Beach or the Agency now or in the future. Notwithstanding the forgoing, "general intangibles" shall specifically exclude "intellectual property." 4. ACCELERATION. The Loan and any interest or penalties that may have accrued thereon shall be due and payable upon Borrower's breach of any of the terms or conditions of this agreement or other obligation contained in this Agreement or any provision of the Promissory Note (Attachment No. 1 to this Agreement). 5. REPRESENTATIONS AND AGREEMENTS OF BORROWER. Borrower represents to Agency as follows, and Borrower agrees that the following representations will continue to be true, and that Borrower will comply with all of the following conditions throughout the term of this Agreement: a. Corporate Existence and Authority. Borrower, is and will continue to be, duly authorized, validly existing and in good standing under the laws of the jurisdiction of the State of California. The execution, delivery and performance by Borrower of this Agreement, and all other documents contemplated hereby have been duly and validly authorized, and do not violate any law or any provision of, and are not grounds for acceleration under, any agreement or instrument which is binding upon Borrower. 09-2069/35716 2 b. Financial Condition and Statements. All financial statements now or in the future delivered to Agency have been, and will be, prepared in conformity with generally accepted accounting principles. Since the last date covered by any such statement, there will be no material adverse change in the financial condition or business of Borrower. Borrower will provide Agency: (i) within 30 days after the end of each month, a monthly financial statement prepared by Borrower, and such other information as Agency shall reasonably request; (ii) within 120 days following the end of Borrower's fiscal year ending December 31, 2009 and each fiscal year ending thereafter, complete annual financial statements, certified by independent certified public accountants acceptable to Agency and accompanied by the unqualified report thereon by said independent certified public accountants; and (iii) other financial information reasonably requested by Agency from time to time. C. Taxes: Borrower has filed, and will file, when due, all tax returns and reports required by applicable law, and Borrower has paid, and will pay, when due, all taxes, assessments, deposits and contribution now or in the future owed by Borrower. d. Compliance with Law: Borrower has complied, and will comply, in all material respects, with all applicable Federal State and Local laws, rules and regulations. e. Access to Collateral and Books and Records: At reasonable times, on three (3) business days notice, Agency or its agents, shall have the right to inspect and the right to audit and copy Borrower's books and records. 6. NON -WAIVER. Failure to exercise any right the Agency may have or be entitled to, in the event of default hereunder, shall not constitute a waiver of such right or any other right in the event of a subsequent default. 7. INDEMNIFICATION. The Borrower shall defend, indemnify and hold harmless the Agency and its respective officers, agents, employees, representatives and volunteers from and against any loss, liability, claim or judgment relating in any manner to this Agreement. 9. DEFAULT. Failure or delay by either party to perform any term or provision of this Agreement EXCEPT FOR REPAYMENT OF THE LOAN which is not cured within thirty (30) days after receipt of notice from the other party constitutes a default under this Agreement. The parry who so fails must immediately commence to cure, correct, or remedy such failure, and shall complete such cure, correction or remedy with diligence. The injured party shall give written notice of default to the party in default, specifying the default complained of by the injured party. Except as required to protect against further damages, the injured parry may not institute proceedings against the parry in default until thirty (30) days after giving such notice. Failure or delay in giving such notice shall not constitute a waiver of any default, nor shall it change the time of default. 10. FURTHER ASSURANCES, The Borrower shall execute any further documents consistent with the terms of this Agreement, including documents in recordable form, as the 09-2069/35716 3 Agency shall from time to time find necessary or appropriate to effectuate its purposes in entering into this Agreement and making the Loan. 11. GOVERNING LAW. This Agreement shall be governed by the laws of the State of California. Any legal action brought under this Agreement must be instituted in the Superior Court of the County of Orange, State of California, in an appropriate municipal court in that county, or in the Federal District Court in the Central District of California. 12. AMENDMENT OF AGREEMENT. No modification, rescission, waiver, release or amendment of any provision of this Agreement shall be made except by a written agreement executed by the Borrower and Agency. 13. AGENCY MAY ASSIGN. Agency may, at its option, assign its right to receive repayment of the loan proceeds without obtaining the consent of the Borrower. 14. ASSUMPTION PERMITTEDIASSIGNMENT PROHIBITED. In no event shall Borrower assign or transfer any portion of this Agreement without the prior express written consent of the Agency, which consent may be given or withheld in the Agency's sole discretion. Assumption of the Loan shall be permitted, if consent is given by Agency at its sole and absolute discretion. This section shall not prohibit the Agency's right to assign all or any portion of its rights to the loan proceeds hereunder. 15. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding and agreement of the parties. This Agreement integrates all of the terms and conditions mentioned herein or incidental thereto, and supersedes all prior negotiations, discussions and previous agreements between the Agency and the Borrower concerning all or any part of the subject matter of this Agreement. The following attachment is part of this Agreement and are incorporated by this referenced as though fully set forth herein: Attachment No. 1: Promissory Note 16. RELATIONSHIP OF BORROWER AND AGENCY. The relationship of Borrower and Agency pursuant to this Agreement is that of debtor and creditor and shall not be, or be construed to be a joint venture, equity venture, partnership, or other relationship. 17. NOTICES. Any notices, requests or approvals given under this Agreement from one party to another may be personally delivered or deposited with the United States Postal Service for mailing, postage prepaid, registered or certified mail, return receipt requested to the following address: To Borrower: Huntington Beach Conference and Visitor Bureau 301 Main St., Ste. 208 Huntington Beach, CA 92648-5171 Phone: 714-969-3492, Fax: 714-969-5592 To Agency: The Redevelopment Agency of the City of Huntington Beach Attention: Deputy Director 2000 Main Street Huntington Beach, CA 92648 09-2069/35716 4 Either party may change its address for notice by giving written notice thereof to the other party. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above. Borrower HUNTINGTON BEACH CONFERENCE AND VISITOR BUREAU By: d' pe ITS: (circle one Chai sident/Vice President AND By: C� �y %''`"� PrNLname, ITS: (circle one) . ecretary/ ief Financial Officer/Asst. Secre - reasurer REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body of the State of California Chairman INITYATED AND APPROVED: De 'ty ExecutiveI2JTztor PROVED AS TO FORM: 1/—\_ <C ri— W Agency Counsel REVIE" APPROVED: Director 09-2069/35716 5 PROMISSORY NOTE Date It ill2 v�y Zck�q The HUNTINGTON BEACH CONFERENCE AND VISITORS BUREAU (hereinafter referred to as `Borrower") promises to pay to the order of the Redevelopment Agency of the City of Huntington Beach the sum of $50,000 in the following manner: July 31, 2010: $50,000 balance. Payment #1 of 5 in the amount of $11,000 (1/5 total loan amount plus 2% interest on current balance). July 31, 2011: $40,000 balance. Payment #2 of 5 in the amount of $10,800 (1/5 total loan amount plus 2% interest on current balance). July 31, 2012: $30,000 balance. Payment #3 of 5 in the amount of $10,600 (1/5 total loan amount plus 2% interest on current balance). July 31, 2013: $20,000 balance. Payment #4 of 5 in the amount of $10,400 (1/5 total loan amount plus 2% interest on current balance). July 31, 2014: $10,200 balance. Payment #5 of 5 in the amount of $10,200 (1/5 total loan amount plus 2% interest on current balance). Agency's receipt of the total sum of $50,000, 00 plus interest and any other charges if applicable shall forever discharge the debt that is the subject of this Promissory Note. If default is made on the payment when due or any part of installment of principal, then, the whole of the principal then unpaid shall become immediately due and payable at the option of the holder of this note, without notice. In the event of commencement of suit to enforce payment of this note, the undersigned agrees to pay such additional sum as attorney's fees as the court may adjudge reasonable. HUNTINGTON BEACH CONFERENCE AND VISITORS BUREAU By: .T,,D print name By: 74 1?-�- print name 33502 ATTACHMENT NO. 1 TO LOAN AGREEMENT CI TY OF HUNTINGTON BEACH Interdepartmental Memo TO: Honorable Mayor and Memberk pf the City Council VIA: Fred A. Wilson, City Adminis FROM: Stanley Smalewitz, Director a Economic Development DATE: May 18, 2009 SUBJECT: Late Communication — Consent Calendar Item 3 — Approval of Loan Request Huntington Beach Marketing and Visitors Bureau The Huntington Beach Marketing and Visitors Bureau (MVB) budget/programming has been impacted due to the reduction in Transient Occupancy Tax (currently 21%). Over the last seven months, the Bureau has reduced programming and salaries and this month eliminated a position. Even with the reductions, the MVB has been utilizing the reserves for operations. Attached is the MVB's budget revisions and contingency planning. The goal of the MVB and the City is to work together to promote Huntington Beach as the tourist destination. If you have any questions, please call me at extension 5909. (Mwl u N,i ca i 10 n ED 09-27 Late Communication -1- 5/18/2009 10:53:00 AM HBMVB BUDGET REVISIONS AND CONTINGENCY PLANNING FY2007/08 ACTUAL INCOME $ 668,783.80 ITOT— ---------------------- $ 658,844.00 BID ----- -- --- $ 1,327,627.80 - - -- - __- FY2008/09 BUDGETED INCOME -] $ 685,732.371TOT as of November 18, 2008 j $ 685,732.37 _ BID $ 1,371,464.75 (without interest or other income) Note -- This budget assumed: 2.5% decrease in TOT/BID L Shorebreak revenues beginning in April Carryover of $25,000 from FY2007/08 FY2_0_ 9- BUDGETED INCOME Revised as of March 18 2009 $ 571,027.04 $ 563 075.20 $ 535,027 180% of last year $ 527,075 80% of last year _' 80% of FY07/08 revenues plus j $ 11,11 34,110214 Shorebreak from 4/24/09 Difference from Budget 11/18/08 CHALLENGE -- FIND $240,000 _ HBMVB Reserve Policy - The Bureau shall maintain separate BID and City Grant financial reserves in interest bearing accounts for the four greatest consecutive months of budgeted fiscal year expenses, plus outstanding accounts payables. This allows the greatest possible investment in the promotion of Huntington Beach, while providing a cushion of support for seasonal variations of income and potential delays in the receipt of funds. Bureau -generated (private) revenues shall not be subject to reserve requirements. BID_& TOT Current Reserves � $ 604,119.00 — - ------ --- - July ---- thru October Expenses $ 548,585.00 �- - - Available BID &TOT Reserves $ 55,534.00 Available Private Source Income 1 $ 142,679.00 j Confirmed Budget Cuts- Delay Sales Manager to next year - „Beach Dog" Invitations/Series/Landing P 9 $ 64,000.00 — Reduction in Staff - -- --�- $ 20,000.00 ---' ---- $ 104,000.00 _ Pull from Reserves $ 55,534.00 - --- $ - 159,534.00 — Pull from Private Source $ 80,466.00 1 Total Budget Adjustments -' $ 240,000.00 Prepared by Donna Mulgrew, 4/14/09 Page 1 Council/Agency Meeting Held: Deferred/Continued to: )iAppr end ❑ Conditionally Approved ❑ Denied City lEl k's S' nature Council Meeting Date: 5/18/2009 Department ID Number: ED 09 - 27 CITY OF HUNTINGTON BEACH REQUEST FOR REDEVELOPMENT AGENCY ACTION SUBMITTED TO: Honorable Chairman and Member f the Redevelopment Agency SUBMITTED BY: Fred A. Wilson, Executive Dir PREPARED BY: Stanley Smalewitz, Deputy Exe u iv Director SUBJECT: Approval of Loan Request from Huntington Beach Marketing and Visitors Bureau Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s) Statement of Issue: Transmitted for your consideration is a request by the Huntington Beach Marketing and Visitors Bureau for a loan of $50,000 from future transient occupancy tax (TOT) revenues. Funding Source: Unreserved/Undesignated fund balance in the Merged Project Area Debt Service Fund (407). Recommended Action: Motion to: Authorize the Executive Director to enter into a Loan Agreement in an amount of $50,000 with the Huntington Beach Marketing and Visitors Bureau, in a written loan agreement and promissory note that has been approved to form by the City Attorney. REQUEST FOR REDEVELOPMENT AGENCY ACTION MEETING DATE: 5/18/2009 DEPARTMENT ID NUMBER: ED 09 - 27 Alternative Action(s): Do not approve the loan; or direct staff to re -negotiate the loan terms. Analysis: The mission of the Huntington Beach Marketing and Visitors Bureau (HBMVB) is to promote Huntington Beach as an overnight destination, enhancing the economy of Huntington Beach through the growth in tourism spending. The HBMVB is funded through two different sources. One is the creation of a Business Improvement District (BID), formed in 2002 to include all hotels and motels in the City. The Hotel/Motel BID requires a 1% levy be assessed on all overnight room stays in Huntington Beach. These funds are collected as a separate itemization with monthly Transient Occupancy Taxes (TOT) paid to the City of Huntington Beach. In addition to the BID revenues, the MVB also receives 10% of the City's TOT revenues under a five-year agreement, approved in May 2006. Due to the economic conditions, the City's TOT is currently down 21 % compared to last year. Therefore, the HBMVB budget is also down 21 %. At the HBMVB Board of Directors meeting held on April 21 2009, the Board has requested a five year loan of $50,000. The loan request would be part of an $79,800 Meeting Marketing Campaign that would include the following elements: A Huntington Beach Meetings Lure brochure in print and online versions ® A Meetings and Events Social Networking Campaign A Meetings and Events Online Marketing, including a Pay -Per -Click Campaign The development and launch of a Huntington Beach Meetings & Events Microsite ® A series of three direct a -mails to 56,300 meeting planners throughout the USA & Canada and 87,500 plus retail travel agents. Without the loan, the HBMVB's campaign. will not be possible. The goal of the Meeting Marketing Campaign will be to promote Huntington Beach to the business meeting market — including retaining the current meetings, increasing attendance at the meetings and length of stays and developing new groups. The marketing will attract group meetings, conferences and incentive travel which will create overnight stays and assist the TOT. The loan of $50,000 will be secured with both a Loan Agreement and Promissory Note (Note will be tied to the TOT revenue agreement — loan and BID) with 2% simple interest and paid annually to the Agency. Strategic Plan Goal: L-4: Create an environment that promotes tourism to increase revenues to support community services and transform the City's economy into a destination economy. -2- 5/11/2009 3:22 PM REQUEST FOR REDEVELOPMENT AGENCY ACTION MEETING ®ATE: 5/18/2009 DEPARTMENT I® NUMBER: E® 09 - 27 Environmental Status: Not Applicable Attachment(s): -3- 5/6/2009 9:04 AM ATTACHMENT #1 Tuesday, May 05, 2009 Mr. Stanley Smalewitz Economic Development Director City of Huntington Beach 2000 Main St. Huntington Beach, CA 92648 HUNTINGTON arm ULAG CALIFORNIA SurlCityVSA. com RE: HBMVB Request for a Redevelopment Agency Loan to Promote Huntington Beach to the Business Meetings Market Dear Stanley, As you are aware, as a result of the recent backlash against corporate meetings due to the "AIG Effect" and fear of federal restrictions on legitimate. business meetings by businesses accepting TARP funds, companies across the country have canceled meetings and events for legitimate business purposes. Our hotel conference properties within the Redevelopment Project Area of the Huntington Beach Redevelopment Agency — the Hilton Waterfront Beach Resort, the Hyatt Regency Huntington Beach Resort and Spa and the soon -to -be -opened Shorebreak Hotel — have all been severely challenged by the cancellation and postponement of conference and business meetings. In addition, as of the last reporting month of March 2009, current fiscal year transient occupancy tax (TOT) receipts are down by 21.9 % year-to-date. As our Huntington Beach Marketing and Visitors Bureau funding is funded half by 1% of TOT and half by a 1% Huntington Beach Hotel Business Improvement District assessment on hotel stays in Huntington Beach, HBMVB revenues are down by the same 21.9% (the Bureau estimates a total revenue decline of more than $237,000 for this 2008/09 fiscal year) at a time when our hotels need our marketing help more than ever. At our last HBMVB board meeting on April 21, 2009, our board of directors unanimously approved and directed HBMVB staff to request a loan of $50,000 from the City of Huntington Beach Redevelopment Agency to initiate an immediate and extensive Meetings Marketing Campaign to promote Huntington Beach to the business meetings market. If approved by the City of Huntington Beach, the HBMVB would pay back this Redevelopment Agency loan over five years, beginning with the 2009/10 fiscal year. This $50,000 would be part of a $79,80o Meetings Marketing Campaign that would include the following elements: • A Huntington Beach Meetings Lure Brochure in print and online versions • A Meetings and Events Online Marketing, including a Pay -Per -Click Campaign • A Meetings and Events Social Networking Campaign • The development and launch of a Huntington Beach Meetings & Events Microsite • A series of three direct e-mails to 56,300 meeting planners throughout the USA & Canada and 8.7,500 plus retail travel agents Huntington Beach Marketing and Visitors Bureau 301 Main St., Ste. 208 Huntington Beach, CA 92648 Phone: (714) 969-3492 1 Fax: (714) 969-5592 The Huntington Beach Marketing and Visitors Bureau will fund all Meetings Marketing Campaign costs beyond the $50,000 City of Huntington Beach Redevelopment Agency loan from our current year budget and our reserve accounts. This much -needed immediate outreach campaign will not be possible without the approval of this loan request. Stanley, we appreciate your consideration and that of the City of Huntington Beach. Sincerely, ---__� J.D afe HBMVB airman of the Board Hilton Waterfront Beach Resort General Manager CC: Mr. Fred Wilson, City Administrator, City of Huntington Beach Mr. Bob Hall, Deputy City Administrator, City of Huntington Beach Huntington Beach Marl�eting and Visitors Bureau 301 Main St., Ste. 208 Huntington Beach, CA 92648 Phone: (714) 969-3492 1 Fax: (714) 969-5592 P .. --� -- '� 01� �� __� — � -- _ _ ,' _n-— CITY OF HUNTINGTON BEACH INTERDEPARTMENTAL COMMUNICATION FINANCE DEPARTMENT TO: FRED A. WILSON, CITY ADMINISTRATOR FROM: BOB WINGENROTH, DIRECTOR OF FINANCE , :. SUBJECT: FIS:2008-09-15 APPROVAL OF LOAN REQUEST FROM HUNTINGTON BEACH MARKETING AND VISITORS BUREAU DATE: MAY 6, 2009 INITIATING DEPARTMENT: Economic Development SUBJECT: Approval of Loan Request from HB Marketing and Visitors Bureau COUNCIL MEETING DATE: May 18, 2009 RCA ATTACHMENTS STATUS Ordinance (w/exhibits & legislative draft if applicable) Attached ❑ Not Applicable Resolution (w/exhibits & legislative draft if applicable) Attached ❑ Not Applicable ❑ Tract Map, Location Map and/or other Exhibits Attached ❑ Not Applicable Contract/Agreement (w/exhibits if applicable) Attached ❑ (Signed in full by the City Attorney) Not Applicable Subleases, Third Party Agreements, etc. Attached ❑ (Approved as to form by City Attorney) Not Applicable Certificates of Insurance (Approved by the City Attorney) Attached ❑ Not Applicable Fiscal Impact Statement (Unbudgeted, over $5,000) Attached ❑ Not Applicable Bonds (If applicable) Attached ❑ Not Applicable Staff Report (If applicable) Attached ❑ Not Applicable Commission, Board or Committee Report (If applicable) Attached ❑ Not Applicable Findings/Conditions for Approval and/or Denial Attached ❑ Not Applicable RCA Author: Fritzal 1519