Palm Springs council approves food-and-beverage agreement with Ovations after debate over $750,000 guarantee and local provisions

Palm Springs City Council on a special meeting voted to approve a management-fee contract for the Palm Springs Convention Center’s food and beverage services with Ovations (working with Oak View Group), after extended public testimony and hours of council questioning about financial safeguards and local protections.

The council-approved contract, as read into the record by city staff, includes a guaranteed minimum payment to the city of $750,000 per year and a provision that requires the parties to negotiate in good faith if convention-center gross receipts fall below $5.6 million. Staff and the vendor said the agreement was amended on the record to clarify that the city’s payment “shall net at least $750,000.”

Why it matters: the contract replaces the previous commission-style arrangement and moves to a management-fee structure the city and vendor say will enable additional policy protections — such as carve-outs for the Palm Springs International Film Society, objective local-brand requirements, and limited nonprofit exemptions — while providing a predictable minimum payment to the city treasury. Opponents and some small-business stakeholders warned that the new model shifts more operational risk to the city and that escape clauses could eliminate the guarantee in materially weak revenue years.

What was said: during public comment, Dan Gore, owner of Oscar’s in Palm Springs, said Oak View Group’s takeover of Plaza Theater management had excluded his long-standing local business from pre-show and post-show event opportunities and asked whether the city should award large public contracts to firms that he said displace local vendors. Philip Hodges questioned who added a ‘‘labor harmony’’ clause to the draft contract and urged the council to publicly debate any policy that could set a precedent for future hospitality contracts. "A decision this consequential made without council direction ... should trouble everyone," Hodges said.

On the vendor side, Chris Morgan, regional vice president for Ovations/OVG, told the council that the management-fee approach makes it feasible to include the kinds of city-directed provisions (local-brand exhibits, nonprofit use, film-festival accommodations) that would be difficult under a pure commission model because the operator otherwise assumes all risk. "The management fee arrangement is in the best interest of the city and in the best interest ... of all stakeholders," Morgan said.

Council questioning focused on the contract’s drafting: several council members noted that, as written, the minimum-commitment clause says the obligation "shall not apply" in an accounting year when gross receipts are below $5.6 million and that the parties would instead renegotiate for the following year. Councilmembers pressed staff and the vendor to confirm the intent was to ensure the city actually receives a $750,000 net payment in ordinary years and to limit escape clauses to catastrophic scenarios. Staff and the vendor agreed on a drafting change on the record to specify the city’s receipt should "net at least $750,000," and counsel noted the escape clause was intended for atypical, crisis-level revenue drops.

Other contract features and clarifications included: a film-festival carve-out allowing the Palm Springs International Film Society to use an outside caterer (subject to insurance, security deposit and a 72-hour no-cost kitchen-use window prior to the event); definitions of "local brands" (greater Coachella Valley) and "local community groups" (nonprofits headquartered in Palm Springs) with exhibits to be drafted and returned within 30 days; and a capped direct operating-cost allowance of up to $150,000 per year for transition/consulting services (staff said the amount was expected to be used, if at all, to support collaboration between Ovations and the existing operator, Savories).

What the council decided: Councilmember DeHart moved to approve the contract with the redlined changes discussed on the record; the motion was seconded, and the mayor announced the motion "carries." The transcript does not record individual roll-call tallies in the meeting minutes contained in the record.

Next steps and caveats: staff will return exhibits for local-brand and nonprofit usage, finalize the edited contract language (including the clarified net-guarantee wording and the film-festival carve-out to apply to the initial term), and monitor the operator’s budgets and annual audits as direct operating costs. Council members asked for continuing transparency about operating budgets, consultant arrangements and any situations that could reduce gross receipts below the 5.6 million threshold.

Public reaction and context: the meeting featured pointed public comments from local business owners debating whether the city should prioritize longstanding local vendors or accept new management that promises larger investments and a guaranteed minimum return. Council members emphasized the need to balance risk mitigation, fiscal prudence and the city’s long-term convention-center investment goals.

The meeting adjourned with the council scheduling its next regular session for Wednesday, July 8.