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    Proposed CVB Contract Extension Includes Verbiage Seemingly Letting Council End Agreement Annually

  • Updated: State Constitutional Provision Also Prohibits Guaranteeing Loan

    (October 19, 2004, updated) -- City management's proposed seven-year extension of the Long Beach Convention and Visitor's Bureau (CVB) contract with City Hall includes verbiage that seemingly lets the City Council end the agreement annually by not funding it.

    "The term of this Agreement...shall terminate on September 30, 2014, subject to annual appropriaton by City's City Council of funds to promote conventions and tourism. If funds are not appropriated, this Agreement shall terminate on September 30 of the fiscal year prior to the fiscal year for which no appropriate is made."

    The verbiage is not attached to city management's agendizing memo but parallels existing language in City Hall's current CVB agreement which expires in Sept. 2007.

    The current agreement also specifies that "[e]ither party may terminate this Agreement by giving the other party ninety (90) days' prior notice."

    (We limit our report to what the contract language says; its legal effects under the circumstances are beyond the scope of this article.)

    [update] also spoke with City Attorney Bob Shannon on the subject, who said that Article 16, section 6 of the CA Constitution effectively precludes any CA city from paying a debt incurred by a private party or guaranteeing a loan to pay that debt. "Once a debt incurred, a city can't undertake to underwrite the debt and has no legal ability to pay the debt or guarantee a loan to pay the debt," City Attorney Shannon said. [end update]

    City Manager Jerry Miller has agendized an item seeking Council approval on October 19 to extend City Hall's current CVB contract until 2014 and increase the 2005 amount given to CVB by roughly $200,000 to nearly $4 million.

    "The proposed increase in funding is to capitalize on the incredible marketing and promotional success resulting from the Long Beach Aquatic Festival and the other investments in Long Beach, such as the Pike at Rainbow Harbor and Carnival Cruise Lines, that help make this a desirable destination for conventions and tourists," City Manager Miller said in his agendizing memo.

    As previously reported by, the CVB has incurred debts of over $1 million in connection with this summer's LB Aquatics Festival. As also reported by a draft report by the City Auditor's office, performed at the City Manager's request and due to be presented at the same October 19 Council meeting, puts the debts at $1.7 million. The Aquatics related CVB debts are not referenced in the City Manager's agendizing memo.

    The CVB currently receives roughly 75% of its annual operating budget from LB City Hall via an allocation of LB's hotel room tax (transient occupancy tax). LB's hotel room tax totals roughly $12-14 million per year...but (under a distant Council action) only half of the hotel room tax reaches LB's General Fund (for police, fire, libraries and other services). The other half is given to other items, with the CVB getting the largest share; smaller sums go to a Rose Parade Float, Grand Prix support and the Redevelopment Agency (from downtown Redevelopment area hotels).

    The City Manager's agendizing memo says his office will attempt to absorb his proposed $200,000 increase to the CVB in FY 05 within existing City appropriations. His memo is not specific about how the CVB payments might change during the seven year contract extension.

    "[CVB] activities and budget will be included in the City's performance management efforts and in the program-based budget development. Key outcome measures for contract performance will be established as part of this process," City Manager Miller's memo says.

    LB's CVB is a privately-run entity on which LB's City Manager serves as an ex officio (non-voting) board member.

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