City Council meeting July 11, 2016, Item 15 Amendment to Operating Agreement 12380-2 between the City and the Pasadena Center Operating Company establishing a maximum amount of Transient Occupancy Tax (TOT) revenues to be transferred to the PCOC annually City Council meeting July 11, 2016, Item 15

Pasadena Center Operating Company PCOC serves as managing agent for Civic Auditorium and conference center Pursuant to Municipal Code Chapter 2.165 Operating Agreement 12,380-2 Current provisions provide that PCOC receives 60% of Base TOT (first 10.18%) 100% of Incremental TOT (>10.18% - 12.11%) No current contractual cap Other provisions not being followed: annual payment of net revenues to City and exemption/reimbursement for state and local taxes

New and potentially new hotels dusitD2 Constance Hotel Residence Inn Opening soon Hyatt Place At Paseo Kimpton/YWCA Hill & Colorado – potentially two Northwest corner Southwest corner

Goal & Approach Implement a cap on total annual amount of TOT transferred to PCOC to provide for additional General Fund revenues Working cooperatively with PCOC GM and Board Chair Ensure PCOC’s ability to meet debt service and operational needs and maintain first rate facilities Eliminate provision of Operating Agreement dealing with payment of net revenues to City Operationalize agreed upon exemption for local and state taxes

Proposal Maintain current split 60% of base and 100% of increment Establish a cap equal to annual debt service for expansion project + $500k for maintenance, repair, capital and/or debt service Address other elements of Operating Agreement Payment of net revenues to City Exemption from state and local taxes Approved by PCOC Board on June 22nd Agreement to review the amendments in two years time (July 2018)

Possible TOT revenue growth

Recommendation Find that the proposed action is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA guidelines section 15061(b)(3), the General Rule; and   Approve an amendment to Operating Agreement 12,380-2 between the City of Pasadena and the Pasadena Center Operating Company (“PCOC” or “Center”) that: (1) establishes a maximum amount of Transient Occupancy Tax revenues to be transferred to the PCOC annually; and, (2) removes the requirement that PCOC pay the City its net revenue, as further described in this report; and Request the PCOC Board of Directors to approve the same consistent with the PCOC Board action of June 22, 2016.