In 2013, under the direction of John Walcutt, Shakespeare Orange County (SOC) entered into a Facility Usage Agreement with the City for operation of the Amphitheater for the months of May through September. Additionally that year, the City entered into a separate agreement with M&D Silva Enterprises dba Strawberry Productions, Inc. (M&D), to operate the theater from October through April.  M&D expanded cultural arts within the community by bringing movies, concerts and comedy performances to the theater and continue to do so.  Both Agreements expire December 31, 2018.  In November 2016, the City received a proposal from the LFA to manage operations at the Amphitheater. LFA has more than 35 years of experience in the entertainment and restaurant industry, including the development of several night clubs, bars and restaurants, as well as concert promotion and concert venues.

The Agreement with LFA provides for a 10-year lease, with two (2) additional five-year options.  In lieu of rental payments for years one (1) through five (5), LFA will guarantee a minimum investment of $125,000 to improve and update the facility within the first four (4) years of the Agreement.  At the time of occupancy, an assessment of the Amphitheater will be conducted to determine the required repairs and improvements, and to accept LFA’s improvement schedule.  Following year five (5), LFA will commit to $20,000 of capital facility improvements per year in lieu of a rental payment. 

In addition to providing $125,000 in capital improvements over the first four (4) years of the Agreement, upon their possession of the Amphitheater, LFA will be installing an additional $165,000 in lighting and sound equipment to the Amphitheater. Prior to LFA taking possession of the Amphitheater, LFA will enter into sublease agreements with both SOC and M&D Silva.  City staff has met with SOC and M&D about this proposal, both parties are supportive of the initiative, and are encouraged by the opportunity to realize significant technical and capital improvements to the facility.

LFA will book live entertainment (indie bands, comedy, and theater), corporate meetings/seminars, and special events (holiday, non-profit, and private) at the Amphitheater.  The Agreement provides the ability for LFA to conduct live entertainment with operational hours up to 11:00 p.m., with restricted sound amplification after 10:00 p.m. The Agreement provides for LFA to explore naming rights for the Amphitheater, with all funds being placed back into the facility.  The Agreement does support LFA obtaining a Type 47 General Alcohol Sale License, requiring twenty-percent (20%) of the net alcohol sale profits to be passed on to the Garden Grove Community Foundation.

At present, the City currently pays up to a maximum of $20,000 toward the cost of utilities at the Amphitheater, and under the Agreement, would continue this assistance in lieu of SOC receiving free stage use (not including front of house costs).  This cost is currently paid out of the City’s General Fund and would continue under the new Agreement.

Additionally, the City pays SOC $20,000 annually to subsidize the performance of Shakespeare.  This cost is paid out of the Cultural Arts Fund, and would continue under a new Program Funding Agreement with SOC.  The City is currently responsible for the maintenance of Amphitheater, ancillary buildings and surrounding facility improvements.  This would continue under the new Agreement, and LFA would be responsible for interior improvements including certain interior maintenance, janitorial, lights, and minor plumbing.

It is recommended that the City Council:

•  Approve a Facility Usage Agreement with LFA Group, LLC, for operation of the Strawberry Bowl Festival Amphitheater; and

• Authorize the City Manager to implement Section 2(a) of the existing Facility Usage Agreement, Termination Without Cause, between the City and Shakespeare Orange County and the City and M&D Silva Enterprises, dba Strawberry Productions, Inc.