City of Culver City, California
City Council Agenda Item Report
RECOMMENDATION:
Staff and the members of the Parks and Recreation Commission recommend the
City Council approve an amendment to the contract with Coca-Cola Bottling
Company of Los Angeles for the provision of beverage vending machine services at
parks and recreation facilities to: 1) extend its terms for an additional one-year
period and; 2) add the stipulation that only “healthier beverage choices” as defined
by SB 965 will be offered.
BACKGROUND:
During fiscal year 1999-2000, the City Council directed staff to identify an initial
“demonstration” project for implementing a sponsorship program. As a result of this
process, the City entered into a five-year agreement with Coca-Cola Bottling
Company of Los Angeles to provide beverage vending services at Culver City park
and recreation facilities (Attachment 1). The termination date of the agreement was
July 31, 2006. The program is currently operating under the status quo until action
is taken by Council.
The agreement with Coca-Cola included the following services to be provided:
(1) Installation and electrical work to establish approximately 30 machines in City
parks; (2) Twenty-four hour repair response for malfunctioning machines; (3) Forty-
eight hour graffiti response on all machines; (4) a list price of $1.25 for 20-ounce soft
drinks and 16-ounce Minute Maid 100% juices; and, (5) a 45% commission rate to
the City of Culver City based on sales of $12.15 per case of beverages.
Meeting Date: 8/14/06 Item Number: A-5
AGENDA ITEM: Approval of an Amendment to the Contract with Coca-Cola
Bottling Company of Los Angeles for the Provision of Beverage Vending Machine
Services at Parks and Recreation Facilities to: 1) Extend Its Terms for an
Additional One-Year Period and; 2) Add the Stipulation that Only “Healthier
Beverage Choices” as defined in SB 965 will be Offered.
Contact Person/Dept.:
Bill La Pointe, PRCS Director
Phone Number: (310) 253-6655
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [X] Attachments: [X]
Public Notification: Master Notification List (8/10/06); Parks and Recreation
Commission (8/10/06) Coca-Cola Bottling Company of Los Angeles (8/10/06); Culver
City Unified School District (8/10/06).
Department Approval:
Bill La Pointe (08/02/06)
City Manager Approval:
Jerry B. Fulwood (08/09/2006)
City Controller Approval:
Marlee Chang (08/09/2006)City of Culver City, California
City Council Agenda Item Report
In the winter of 2001, Coca-Cola began installing beverage vending machines in City
parks at the sole expense of Coca-Cola. Twenty-nine beverage vending machines
were initially installed at various parks within the City. The total number of beverage
vending machines has fluctuated somewhat during the past five years, mainly due to
the modification of some vending machine sites to accommodate vandal-resistant
cages and the removal of machines during capital improvements at various park and
recreation facilities. The average number of beverage vending machines that have
been in operation throughout the contract period is 28 machines. There are currently
26 vending machines in the following locations:
The City’s association with Coca-Cola Bottling Company was conceived as an
“experiment” that it was hoped would both generate revenue and provide a service
to park and recreation facility users. As Attachment 2 indicates, net profits after
utility costs were projected to be $36,996.51 annually (based on 35 vending
machines each selling eight beverages daily).
DISCUSSION:
Program Performance
The combined gross revenue from the Coca-Cola beverage vending machine
program since its inception in October 2001 through June 2006 is $67,646.
Quarterly commission revenue for the fiscal years during which the beverage
vending machine program was in full operation is presented in the table below:
PARK
# OF
MACHINES
BLANCO PARK 2
CULVER CITY PARK 4
CULVER WEST ALEXANDER PARK 2
EL MARINO PARK 3
FOX HILLS PARK 2
TELLEFSON PARK 2
SYD KRONENTHAL PARK 2
LINDBERG PARK 2
VETERANS PARK COMPLEX 7
TOTAL 26City of Culver City, California
City Council Agenda Item Report
The vending machines are not metered individually for electricity usage. Using
information from representatives of Coca-Cola Bottling Company and Southern
California Edison, the following is a reasonably accurate estimate of electricity costs:
Each vending machine, operating 24 hours a day, uses 270 kWh/month.
The average number of vending machines in operation was 28 machines.
The average cost per kWh is $0.097 (assuming a General Service – 2 rate).
270 kWh/month x $0.097 kWh x 28 machines = $ $733.32/month average cost of
electricity. Factoring in a 5% average error of the estimate (since we do not have
precise utility information) cumulative electricity costs could run anywhere from $697
to $770 monthly, or $8,364 to $9,240 annually. The average annual vending
beverage machine gross revenue (calculated using the figures from the table above)
is $14,443. Therefore, taking electricity costs into account, the average net annual
vending machine revenue ranges from $5,230 to $6,709 (for 28 machines).
There has been some speculation that there could be an increase of up to 17% in
the cost of electricity during fiscal year 2006-07. If this potential increase is factored
into the above equation, electricity costs for 28 machines could range from $9,776 to
$10,811 annually. Average annual net vending machine revenue would then be
$3,642 to $4,667 (for 28 machines).
The index that Coca-Cola uses to track purchasing trends is based on the number of
cases needed to restock each vending machine or “cases sold.” The graph below
presents the percentage of cases sold during the period 2004 through 2006 grouped
by product.
2002-03 2003-04 2004-05 2005-06
Jul-Sep $4,755 $6,201 $5,341 $4,419
Oct-Dec $2,342 $3,630 $2,354 $3,625
Jan-Mar $1,685 $1,451 $1,673 $2,558
Apr-Jun $4,777 $6,134 $3,571 $3,254
total $13,558 $17,416 $12,939 $13,856
CASES SOLD 2004-2006
POWERADE,
28%
CARBONATED
- SUGAR, 43%
WATER, 13%
CARBONATED
- DIET, 6%
JUICE /
PUNCH, 8%
TEA, 2%City of Culver City, California
City Council Agenda Item Report
Policy Considerations
The chart above demonstrates that 49% of the cases of beverages sold over the
past two years have been carbonated beverages (sweetened with sugar – 43%;
artificially sweetened – 6%). An update of the Coca-Cola Vending Machine program
was given at the February 1, 2005 meeting of the Parks and Recreation
Commission. At that meeting, concern was expressed about offering healthier
choices for children other than carbonated beverages (attachment 3). It is opined
that sugar-infused carbonated beverages may put individuals at higher risk for
certain heath problems. A fact sheet published by the California Center for Public
Heath Advocacy states that, “Soda Consumption Puts Children at Risk for Obesity,
Diabetes, Osteoporosis and Cavities” (Attachment 4).
The National Recreation and Park Association (NRPA) believes that park and
recreation agencies have the potential to greatly impact the nutrition choices of
youth, and, therefore, their health. In January 2006, the NRPA conducted a survey
of its members regarding their agency’s use of vending machines. Approximately
sixty-five percent (65%) of the park and recreation professionals who responded to
the survey stated that they were interested in improving the vending machine
options provided by their departments by providing more healthy choices.
This trend is consistent with recent legislation that has focused on the issue of
childhood obesity. For example, the California Childhood Obesity Prevention Act of
2003 banned carbonated beverages in vending machines located at elementary,
middle and junior high schools. Beginning July 2004, vending machines could
contain only milk, water and 100% fruit juice. SB 965 (Escutia), the Health
Beverage Bill, was signed by Governor Schwarzenegger on September 15, 2005.
This legislation expanded the language that described the type of beverages that
can be sold on school campuses (grades kindergarten through twelfth) throughout
the school day. SB 965 guidelines promote healthier choices and, although the City
is not required to do so, staff and the members of the Parks and Recreation
Commission recommend that Council consider applying such guidelines to beverage
vending machines in parks and recreation facilities within Culver City. Specifically,
these guidelines require that beverages sold to the public in vending machines must
be:
Fruit-based and vegetable-based drinks that are at least 50% juice without added
sweeteners
Drinking water without added sweeteners
Milk products including 2%, 1%, nonfat, soy, rice and other similar non-dairy milk
An electrolyte replacement beverage that contains no more than 42 grams of
added sweetener per 20-ounce servingCity of Culver City, California
City Council Agenda Item Report
As a matter of policy, staff and the Parks and Recreation Commission believe that
the Parks and Recreation Department should be providing products that will
encourage the health and well-being of our community.
Parks and Recreation Commission Action
The issue of extending the Coca-Cola contract for a one-year period and offering
healthier beverage choices only was discussed by the Parks and Recreation
Commission at the August 1, 2006 meeting. During public comment on the item,
Ms. Marla Wolkowitz, a member of the Culver City Unified School District (CCUSD)
Board, spoke as a private citizen to inform the Commission that she was in
agreement with the provision to offer “healthier choices only” in beverage machines
located in parks and recreation facilities within Culver City. She stated that the
School Board recently adopted a similar, although somewhat more stringent, policy
with regard to the choice of beverages sold in vending machines on CCUSD school
campuses. She also stated that the City should consider working together with the
school district so that the standards for beverages offered in vending machines at
schools and in park and recreation facilities are consistent.
The Commission took action (5-0) to recommend that the City Council approve an
amendment to the contract with Coca-Cola Bottling Company of Los Angeles for the
provision of beverage vending machine services at parks and recreation facilities to:
1) extend its terms for an additional one-year period and; 2) add the stipulation that
only “healthier beverage choices” as defined by SB 965 will be offered (note: a draft
of the minutes of the August 1, 2006 Commission meeting was not available for
attachment at the time this report was submitted).
The Commission was advised that staff will look into the following issues with regard
to beverage vending machines in parks: (1) partnering with the School District in
developing and implementing a consistent “healthier beverage choices only” vending
machine policy; and (2) exploring the possibility of changing the pricing for the
beverages in the vending machines from $1.25 to $1.00 in hopes of increasing the
volume of sales.
FISCAL ANALYSIS:
A Coca-Cola representative has informed the City that sales for some clients who
have chosen to offer “healthier choices only” have been reduced by approximately
two-thirds. On the other hand, an article posted on the National Recreation and
Park Association website (www.nrpa.org) states that convenience plays a large part
in consumer buying trends and that some school districts have not experienced the City of Culver City, California
City Council Agenda Item Report
dramatic reduction in sales that was predicted upon implementation of “healthier
choices only” policies (attachment 5). Any potential loss of revenue must be offset
by other sources of revenue or a reduction in services. The Parks, Recreation and
Community Services Department will explore new ways to generate revenue while
developing its comprehensive plan, which was funded in fiscal year 2006-07 and
through the City’s Comprehensive Financial Plan (2006-07).
An immediate way to improve the overall financial performance of the vending
machine program might be to remove those vending machines that have not
performed well enough to cover utility costs. Based on the figures presented above,
an individual vending machine must generate approximately $330/year just to cover
utility costs. Looking at the machines individually, the eight (8) vending machines at
the following locations did not generate enough revenue to cover utility costs during
fiscal year 2005-06:
LOCATION
MACHINE
TYPE
PADDLE TENNIS COURT AT VETS Coca-Cola
VETS MUTIPURPOSE ROOM Coca-Cola
VETS MUTIPURPOSE ROOM Dasani
KRONENTHAL PARK PowerAde
BLANCO PARK Coca-Cola
BLANCO PARK PowerAde
CULVER CITY PARK (mid-level) Coca-Cola
TELLEFSON PARK PowerAde
ATTACHMENTS:
1. Coca-Cola Bottling Company of Los Angeles. Contract No. 2001-175.
2. July 9, 2001 Culver City Council Agenda Item Number H-4.
3. Excerpt of the minutes of the February 1, 2005 meeting of the Parks and
Recreation Commission.
4. “Soda Consumption Puts Children at Risk for Obesity, Diabetes,
Osteoporosis and Cavities,” a fact sheet published by the California Center
for Public Heath Advocacy.
5. “Beverages in Schools,” an article posted on the National Recreation and
Park Association website.City of Culver City, California
City Council Agenda Item Report
MOTION:
That the Council:
1. Approve an amendment to the Contract with Coca-Cola Bottling Company of
Los Angeles for the provision of beverage vending machine services at parks
and recreation facilities to: 1) extend its terms for an additional one-year
period and; 2) add the stipulation that only “Healthier Beverage Choices” as
defined in SB 965 will be offered.
2. Authorize the City Attorney’s Office to prepare the Amendment to the contract
and authorize the City Manager to execute the Amendment.
or
3. Provide direction to staff as deemed appropriate.
MEETING DATE: August 14, 2006
AGENDA ITEM: Approval of an Amendment to the Contract with Coca-Cola
Bottling Company of Los Angeles for the Provision of Beverage Vending
Machine Services at Parks and Recreation Facilities to: 1) Extend Its Terms for
an Additional One-Year Period and; 2) Add the Stipulation that Only "Healthier
Beverage Choices" as defined in SB 965 will be Offered.
ATTACHMENTS
Pages
1. Coca-Cola Bottling Company of Los Angeles 1-15
Contract No. 2001-175
2. July 9, 2001 Culver City Council Agenda Item 11-14
Number H-4
3. Excerpt of the minutes of the February 1, 2005 15
meeting of the Parks and Recreation Commission
4. "Soda Consumption Puts Children at Risk for 16
Obesity, Diabetes, Osteoporosis and Cavities," a
fact sheet published by the California Center for
Public Heath Advocacy
5. "Beverages in Schools," an article posted on the 17-18
National Recreation and Park Association websiteAttachment 1
AGREEMENT
The City of Culver City — Coca-Cola Bottling Company of Los Angeles
(Parks and Recreation Facilities Beverage Vending Partnership)
No. 2001-175
WITNESSETH
THIS AGREEMENT (the "Agreement") is made and entered into as of the First Day
of August, 2001, by and between the City of Culver City, a municipal corporation organized
and existing under and pursuant to the Constitution and the laws of the State of California
(the "City"), and located at 9770 Culver Boulevard, Culver City, California, and Coca-Cola
Bottling Company Of Los Angeles, a corporation organized and existing under and
pursuant to the laws of the State of Georgia, and having a principal place of business at
1334 South Central Avenue, Los Angeles, California ("Coca-Cola").
WHEREAS, the City wishes to implement a sponsorship program for a beverage
company to partner with the City as the exclusive beverage provider of the Culver City
Human Services Department; and
WHEREAS, both Coca-Cola and Pepsi Bottling Company submitted bids for
exclusive vending authority, on April 17, 2001, City Staff met with the City Council in a
legally authorized closed session to discuss and consider four alternatives and to discuss
negotiations, and on June 25, 2001 City Staff met with the City Council in a legally
authorized closed session to discuss the proposed terms of an agreement; and
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negotiations, and on June 25, 2001 City Staff met with the City Council in a legally
authorized closed session to discuss the proposed terms of an agreement; and
WHEREAS, the City and Coca-Cola now desire to enter into an arrangement for
Coca-Cola to provide vending machines at park and recreation facilities in the City; and
WHEREAS, the City Council, at its properly noticed and publicly held meeting of|1010|July 9, 2001, authorized entering into an agreement with Coca-Cola for a five year|1010|partnership for thirty-five full service vending machines, authorized the City Attorney to
draft this Agreement and authorized the Chief Administrative Officer to execute this
Agreement on behalf of the City.
NOW, THEREFORE, in consideration of the premises and the respective
representations and agreements hereinafter contained, the parties hereto agree as follows:
Section 1. Conditions, Duties and Responsibilities of Coca-Cola.
Under the direction of, and to the sole reasonable satisfaction of, the City's Chief
Administrative Officer, or the Chief Administrative Officer's designee (collectively and
individually, the "CAO"), Coca-Cola shall:
(a) Install Royal Marketing Vender-type beverage machines (the
"Machines"). The number of Machines is anticipated to initially be thirty-seven (37),
however Coca-Cola and the City shall work and confer together in good faith in arriving at
the final number of machines, in future decisions regarding the number of Machines and in
establishing locations for each Machine. Each Machine shall have a steel door and
beverage vending industry standard vandal-resistance and safety features, and each
Machine shall be posted in a manner readable to the public with the telephone numbers
necessary obtain a refund or to report a machine being damaged, disabled or
malfunctioning, or defaced with graffiti.
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(b) Install one recycling container at each of the thirty-seven locations of the
Machines.
(c) Provide repair response for all damaged, disabled and malfunctioning
Machines Monday through Friday, excluding holidays, and provide the City with repair and
graffiti response and refund response telephone numbers and post these telephone
numbers on the machine. Coca-Cola shall maintain sufficient replacement parts for the
Machines so as to enable damaged, disabled or malfunctioning Machines to be repaired at
the Machine's location. In the event Coca-Cola shall be called by the City for repair
response, Coca-Cola agrees to have a repair response person on scene within twenty-four
(24) hours on the first available business day, Monday through Friday, excluding holidays.
Any and all repairs shall be undertaken and completed as soon as reasonably possible,
and the entire cost for such repairs shall be borne by Coca-Cola. In the event a Machine
shall be damaged, disabled or malfunctioning to the point where repair is impossible or
impractical, Coca-Cola agrees to replace the damaged, disabled or malfunctioning
Machine within forty-eight (48) hours with a replacement Machine, Monday through Friday,
excluding holidays. Coca-Cola agrees to resolve any vending disputes with customers at
Coca-Cola's sole expense.
(d) Provide graffiti response for all Machines and recycling containers seven
days per week, including weekends and holidays, and provide the City with a graffiti
response telephone number. In the event Coca-Cola shall be called by the City for graffiti
response, Coca-Cola agrees to have a graffiti response person on scene within forty-eight
(48) hours, Monday through Friday, excluding holidays.
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(e)
Vend a combination of twenty (20) ounce carbonated soft drinks and
water and twenty (20) ounce, one hundred percent (100%) juices and non-carbonated
beverages.
(f)
Initially list and sell all drinks for one dollar and twenty-five cents ($1.25)
per beverage. Coca-Cola shall not change the sales price without first obtaining the
permission of the City. It is understood by the parties hereto that the sale price of
beverages may from time to time fluctuate based on a variety of factors, and the parties
hereto will consult and agree in good faith on a reasonable sale price.
(g)
Coca-Cola specifically agrees that Coca-Cola shall not in any manner use
the name of the City of Culver City, nor the City Seal nor any City logotype, for
advertisement or any other purpose, without the express prior written consent of the City
Council.
Section 2. Commission. Coca-Cola shall pay to the City a forty-five percent (45%)
commission on all sales. The commission shall initially be based on sales of twelve dollars
and fifteen cents ($12.15) per case of beverage; all cash collected, net of taxes and CRV.
The commission includes five percent (5%) for utility costs for machine operation. Coca-
Cola shall provide the City with quarterly sales figures, and shall issue to the City
commission checks at that time.
Section 3. Term of Agreement. The term of the Agreement shall commence on
the Effective Date, as defined herein, and the Agreement shall continue in full force and
effect until July 31, 2006, unless the Agreement is terminated earlier pursuant to the terms
hereof.
Section 4. Termination. Either the City or Coca-Cola may terminate the
Agreement at any time with or without cause, at the sole discretion of the party terminating
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(jam)the Agreement, by giving thirty (30) business days written notice of termination to the other
party. The City shall be entitled to pro rata payment of commissions for all sales for as
long as any machine or machines shall remain in service on City property.
Section 5. Business Licenses and Permits. Coca-Cola and subcontractors if
any, shall be required to obtain all necessary documentation, including, but not limited to,
any and all certificates, licenses and permits required to do business in the City.
Section 6. Indemnification. Coca-Cola shall protect, defend, indemnify, and hold
harmless the City and its elected and appointed boards, commissions, officers, agents and
employees from any and all claims, liabilities, expenses or damages of any nature,
including attorney fees, for injury to property or to any person, arising out of or in
connection with Coca-Cola's operation or placement of the vending machines.
The City does not waive any rights against Coca-Cola which it may have by reason
of the above hold harmless clause due to the acceptance by the City of insurance policies
described herein.
In the event that Coca-Cola and City are sued by a third party for damages caused
or allegedly caused by the operation or placement of the vending machines, Coca-Cola
shall not be relieved of its indemnity obligation to City by any settlement with any such third
party unless that settlement includes a full release and dismissal of all claims by the third
party against the City.
Section 7. Insurance. Without limiting its obligations pursuant to the
"Indemnification" section herein, Coca-Cola shall obtain and cause to remain in full force
and effect for the duration of the Agreement:
A. General Liability Insurance in the minimum amount of one million
dollars ($ 1,000,000) per occurrence and five million dollars ($5,000,000) aggregate.
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28B. • Workers' Compensation Insurance or State approved self-insurance in
the statutorily required amount.
C. Automobile Liability Insurance in the following amounts:
Bodily Injury Liability - $1,000,000 per occurrence
Property Damage Liability - $1,000,000 per occurrence
In addition to the above-stated, Coca-Cola agrees to designate the City, its
agents, employees and elected and appointed officials as additional insureds to the
general liability and automobile liability policies.
Section 8. Notices. All Notices given under the Agreement shall be addressed to
the parties as follows:
To the City:
To BCI Coca-Cola:
City of Culver City
Coca-Cola Bottling Company
Attn: Interim CAD
of Los Angeles
9770 Culver Boulevard
1334 South Central Avenue
Culver City, CA 90232
Los Angeles, CA 90021
Section 9. Attorney Fees. If any action is brought in law or equity to enforce or
interpret the provisions of the Agreement, the prevailing party shall be entitled to
reasonable attorney fees in addition to any other relief to which it may be entitled.
Section 10. Force Majeure. In case by reason of force majeure the Coca-Cola
shall be rendered unable wholly or in part to carry out the Coca-Cola's obligations under
the Agreement, then except as otherwise expressly provided in the Agreement, if the Coca-
Cola shall give notice and full particulars of such force majeure in writing to the City within
a reasonable time after occurrence of the event or cause relied on, the obligations of the
Coca-Cola giving such notice, so far as they are affected by such force majeure, shall be
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reasonable time period for the removal of the effect thereof, but for no longer period, and
the Coca-Cola shall endeavor to remove or overcome such inability with all reasonable
dispatch. The term "force majeure," as employed herein, shall mean acts of God, strikes,
lockouts or other industrial disturbances, acts of the public enemy, orders of any kind of the
Government of the United States or of the State or any civil or military authority,
insurrections, riots, epidemics, landslides, lightning, earthquakes, fires, hurricanes, storms,
floods, washouts, droughts, arrest, restraining of government and people, civil
disturbances, explosions, partial or entire failure of utilities, shortages of labor, material or
supplies or transportation, or any other similar or different cause not reasonably within the
control of the party claiming such inability.
Section 11. Assignment/Subcontracting. The Agreement shall not be assigned
or subcontracted without the prior written permission of the City. Coca-Cola agrees that in
the event of any assignment or subcontract without the prior written permission of the City,
the Agreement shall be voidable at the sole option of the City.
Section 12. Prohibition Against Transfers. Neither Coca-Cola nor the City shall
assign, sublease, hypothecate, or transfer this Agreement or any interest or obligations
herein directly or indirectly, by operation of law or otherwise during the term of this
Agreement of any of the warranties set forth herein without the prior written consent of the
other. As a condition to any assignment or transfer, any prospective assignee or
transferee shall also assume the obligations pursuant to this Agreement, including the
warranties set forth herein. Any attempt to assign, sublease, hypothecate, or transfer this
Agreement without prior written consent shall be voidable at the sole discretion of the other
party, and if the other party shall void any such assignment, sublease, hypothecation, or
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transfer, any assignee, sublessee, hypothecate or transferee shall acquire no right or
interest by reason of such attempted assignment, hypothecation or transfer.
The sale, assignment, transfer or other disposition of any of the issued and
outstanding capital stock of Coca-Cola, or of the interest of any general partner or joint
venture or syndicate member or cotenant, if Coca-Cola is a partnership or joint venture or
syndicate or cotenancy, which shall result in changing the control of Coca-Cola, shall be
construed as an assignment of this Agreement. Control means fifty percent (50%) or more
of the voting power of the corporation.
Section 13. Independent Contractor Status. At all times during, Coca-Cola shall
be an independent Contractor of the City and shall not be, nor hold itself out to be, nor hold
its employees, officers or agents out to be, employees, officers or agents of the City.
Section 14. Severability. If any clause, provision or section of the Agreement shall
be ruled invalid by any court of competent jurisdiction, the
invalidity of such clause, provision or section shall not affect any of the remaining
provisions hereof.
Section 15. Waiver. Waiver by the City of any breach of any term, covenant or
condition herein contained shall not be deemed a waiver of such term, covenant or
condition or any subsequent breach of the same or any other term, covenant or condition
herein contained.
Section 16. Amendment. Notwithstanding anything herein contained to the
contrary, the Agreement, and the provisions contained herein, may be altered, changed or
amended, by mutual consent of the parties hereto. No
alteration, change or amendment shall be valid unless made in writing and signed by the
parties hereto.
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Section 17. Section Headings. The section headings of the Agreement are for
convenience and reference only, and shall in no way be deemed to define, limit, or add to
the meaning of any provision of the Agreement.
Section 18. Governing Law/Compliance with Laws. The Agreement shall be
governed by, and construed in accordance Independent with, the laws of the State of
California. The parties hereto agree to be bound by all federal, state and local laws,
ordinances, regulations and directives pertaining to the services to be performed
hereunder. All disputes arising hereunder shall be resolved in Los Angeles County.
Section 19. Date for Reference Purposes. The Effective Date of the Agreement
shall be the date on which it is executed by the City. The date of the Agreement is for
reference purposes only.
Section 20. Counterparts. The Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one
and the same instrument.
Section 21. Interpretation of Agreement.
The parties hereto expressly agree that
the Agreement shall be construed as though written jointly by both parties, and that the
language of the Agreement shall not be construed as to favor one party over the other.
Section 22. Extent of Agreement. The Agreement represents the entire and
integrated agreement between the City and Coca-Cola and supersedes any and all prior
negotiations, representations or agreements, either oral or written.
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(jam)hereunto subscribed.
BCI COCA-COLA BOTTLING COMPANY OF LOS ANGELES|1010|Dated: /0- jo- 0 )
Dated:
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IN WITNESS WHEREOF, the parties hereto have caused their names to be
NAME: `-/ 6&-tA,JC* =-12_
(Typed or Printed)
TITLE: -3(ZAkr---tk
A NAG eg---
CITY OF CULVER CITY
BY:
MICHAEL HOMPSON
Interim Chief Administrative Officer
APPROVED AS TO FORM:
APPROVED AS TO CONTENT:
By: ez:--- (k CD
Dated: DON ROGERS
Human Services Director
Our File No. 2001-175 [dmm]
By: CAROL A. SCHWAB
City Attorney
Dated: JO/3
76/
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. . ..... . . . .......................... ... ............................................................
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Coca-Cola, ................ . ......... .................... ..
omrnlssion, Parks and
. . . .
RECOMMENDATION:
That the City Council authorize entering into an Agreement for a Five-Year Period
with Coca-Cola Bottling Company ("Coke") to Provide Beverage Vending Services at
parks and recreation facilities in Culver City.
BACKGROUND:
Last fiscal year, the City Council authorized the Human Services staff to identify an
initial "demonstration" project for implementing a sponsorship program and report
back to the City Council with specific recommendations for implementation.
Since that time, staff sent out invitations to beverage companies to partner with the
City as the exclusive beverage provider of the Culver City Human Services
Department. This includes the exclusive right to vend beverages at park and
recreation facilities in Culver City. After numerous meetings and site visits, a bid
was received from both Coke Bottling and Pepsi Bottling Companies for exclusive
vending authority.
On April 17, 2001, staff met with the Council in Closed Session to present four
alternatives for Council's consideration and to discuss negotiations. Council directed
staff to proceed with negotiations with Coke for a 5-year partnership. Staff met with
Council a second time in Closed Session on June 25, 2001, to discuss proposed
terms of the agreement including the size and price of the beverage and energy
costs. At this meeting, Council directed staff to return for authorization to enter into
the agreement with Coke. Upon approval of this agreement, staff will move forward,
per Council direction, on a first amendment to the agreement to provide these
services at other selected City and Agency facilities.
10 of 15
City of Culver City, California
Attachment 2
City Council Agenda Item Report
1 1 .City of Culver City, California
City Council Agenda Item Report
DISCUSSION:
The proposed a 5-year partnership with Coke is based on the following terms for 35
proposed full service vending machines:
Coca-Cola Bottling Company Shall Agree to the Following Terms:
1. Authorize a 5-Year Agreement with the City of Culver City.
2. Install 37 Royal Marketing Vender-type beverage machines with steel door,
vandal resistant feature at various Culver City park locations.
3. Perform all necessary electrical connections to establish service.
4. Perform all work in accordance with City standards.
5. Maintain a current Culver City business license at all times.
6. Provide 24-hour repair response for malfunctioning machines, including
weekends and holidays.
7. Provide 48-hour graffiti response on all machines.
8. Indemnify the City of Culver City from all claims.
9. Maintain a minimum of $1 Million Liability insurance per occurrence, $5 Million
aggregate throughout the Agreement.
10. Provide one recycling container with vandal resistant locks adjacent to each
vending machine.
11.Vend a combination of 20 ounce carbonated soft drinks and 16 ounce Minute
Maid 100% juices.
12.List drinks at $1.25 vend price.
13. Provide 45% commission rate to the City of Culver City
a. Based on sales of $12.15 per case of beverages.
b. Commission includes 5% for utility costs for machine operation.
c. Issue commission checks and sales recap on a quarterly basis.
The proposed Agreement with Coca-Cola is for five (5) years and contains the
standard 30-day notification of termination clause. This arrangement provides
flexibility to the City to expand the partnership or re-bid for a Citywide beverage deal,
re-bid with a different provider, and/or abandon the experiment, if appropriate, in less
time than with Pepsi, who proposed a 10-year Agreement.
Funds generated from this partnership are based upon a commission rate of 45%
and are dependent upon the actual sales, which are subject to seasonal fluctuations
in attendance at parks. However, due to the high rate of participation and
attendance at Culver City parks and recreation facilities, we believe we will match
the average sale rate in Southern California parks, which is eight (8) bottles per day
according to both Coke and Pepsi.
11 of 15
12.City of Culver City, California
City Council Agenda Item Report
FISCAL ANALYSIS:
Staff negotiated a higher than average 45% commission rate to include 5% for
increasing utility costs. The commission rate is proposed at 45% on net beverage
sales per case, payable on a quarterly basis. An example of the commission rate is
calculated below:
Vend Price $ 1.25 x 24 bottles/case = $ 30.00 gross sales
Sales Tax 8.00% x $30.00 gross sales = - $ 2.40
CRV $ 0.60 1 case = - $ 0.60
$ 27.00 net sales
Commission at 45% of net sales: $ 12.15 Commission per case
Based on a conservative estimate by Coke, if each machine sold eight (8)
beverages per day, the potential annual commission is estimated at $51,738.51.
However, the thirty-five (35) new vending machines will result in additiooal energy
costs. According to Coke, each machine operating 24-hours/day uses 270
kWh/month. The current utility charge is $0.13/kWh, resulting in $35.10/month per
machine or $1,228.50/month for 35 machines. Annual utility costs for all machines
at this billing rate are anticipated to be $14,742. Therefore, the projected net profit
after utility costs would be $36,996.51 annually. Should energy prices stabilize or go
down, the net profit would increase proportionately.
The actual energy consumption of the newly installed machines will be closely
monitored and a report will be given to Council six months after installation to track
actual costs.
ATTACHMENTS:
1. Coca-Cola Proposal
2. Term Sheet
3. Product Selection Sheet
4. Energy Consumption Memo from Royal Vendors
12 of 15
13.City of Culver City, Cglifornia
City Council Agenda Item Report
MOTIONS:
(1) Authorize entering into an Agreement for a Five-Year Period with Coca-Cola
Bottling Company of Los Angeles to Provide Beverage Vending Services at Park
and Recreation facilities in Culvr City.
(2) Direct the City Attorney to prepare the necessary documents and the Chief
Administrative Officer to sign the documents.
• (3) Direct Staff to proceed with negotiations for a Citywide agreement for selected
City and Agency properties.
13 of 15
14.REGULAR MEETING OF THE PARKS AND RECREATION COMMISSION
February 1, 2005, 7:00 p.m.
CITY OF CULVER CITY, CALIFORNIA
Attachment 3
CHAIR ANITA SHAPIRO, PRESIDING
Call to Order
The meeting of the Parks and Recreation Commission was called to order at 7:06 p.m. in the Council Chambers, City Hall.
000
Commissioners Shapiro, Cooper, Deen, Redholtz, James (late arrival)
Don Rogers, Parts, Recreation and Community Services Director
Patti Mooney, Senior Management Analyst
Marty Nicholson, Recreation Manager
Jeff Eastman, Fire Chief
Tak Matsuura, Parks Supervisor
Scott Jacobs, Park Maintenance Crew Leader
Kevin Oamilda, Recreation Specialist
000
Roll Call
Members Present:
Staff Present:
Item A-1.
(7:45 p.m.)
Discussion on Vending Machine Sales at Various Park Sites.
Don Rogers addressed this item, stating that at Commissioner Cooper's request, staff has compiled information on the
background, purchasing trends, revenue and sales, and service related issues pertaining to the beverage vending machines
provided by the Coca-Cola Bottling Company and the snack vending machines by First Class Vending Inc.
Mr. Rogers invited questions from the Commission regarding the staff report.
Commissioner Cooper noted the commission totals for the past three calendar years ($48,456) from Coca-Cola Bottling
Company have fallen below the projected revenue ($50,000 per year) originally pledged by the company representative. He
asked whether the contract with Coca-Cola can be terminated before the expiration date (July 31, 2006) and bids solicited for a
new vendor.
He once again spoke to his concern about offering healthier choices for children other than the current choices available of
carbonated beverages and candy snacks.
Staff noted that vending companies general provide products based on consumer demand rather than concern for nutritional
standards. It was also pointed out that many of the vending machines are used more by adults than children.
There was some discussion about the fiscal and practical impact if the City were to purchase and stocking its own vending
machines.
Commissioner Redholtz called attention to the Contra Costa County vending machine policy that includes a 50% rule to promote
healthy snacking and the policy's reference to a State legislation for compliance. She suggested looking into applying a similar
guideline for snack vending machines.
There was additional discussion regarding the aesthetics of vandal resistant cages that are installed on vending machines and
consideration for relocating some of the machines to more suitable locations.
Staff was instructed to report back to the Commission with additional information regarding the vending machine agreement with
Coca-Cola and any state regulations governing the contents of vending machines in public parks.
000
15.CALIFOMA CENTER FOR •
PUBLIC HEALTH ADVOCACY
One 20 oz soda = 17 teaspoons of sugar and 250 calories
'Decreasing soda and sweetened beverage consumption is one of
(U.0 Berkeley Center for Weight and Health, 200$)
THE MOST promising strategies for preventing obesi
Attachment 4
A nonpartisan, nonprofit
organization established by the
Northern and Southern California
Public Health Associations
Post Office Box 2309
Davis, California 95617
Telephone 530.297.6000
Fax 530.297.6200
www.PublicHealthAdvocacy.org
FACT SHEET:
Soda Consumption Puts Children at Risk For
Obesity, Diabetes, Osteoporosis, and Cavities
HUGE CONSUMPTION OF SODA
Our Children Drink a LOT of Soda. Soft drink consumption has more than doubled since 1971.
The average teenage boy drinks two 12 oz sodas per day or more than 700 cans per year. The
average teenage girl drinks 1.4 twelve oz sodas per day or more than 500 cans per year. (CSPI,
Liquid Candy, 2005— based on 1999-2002 National Health and Nutrition Examination Survey)
Lots of Soda Means LOTS of Sugar. Soft drinks comprise the leading source of added sugar in
the American diet, providing the average teenage boy with the total recommended allowance for
sugars from all sources for the entire day. (CSP1)
NEGATIVE IMPACT ON HEALTH
More Sodas Lead to Childhood Obesity. Every additional daily serving of sugar-sweetened soda
increases a child's risk for obesity by 60%. Regardless of demographics and lifestyle, soda
consumption is an independent risk factor for childhood obesity. (The Lancet, Feb 2001)
More Sodas Lead to More Diabetes. Research indicates a strong positive relationship between
consumption of sugar sweetened beverages (i.e. regular sodas and fruit punches) and diabetes risk.
Increasing one's consumption of sugary soft drinks significantly increase the risk for both weight
gain and type 2 diabetes. (Journal of the American Medical Association, Aug 25 2004)
More Sodas Mean Less Calcium and More Osteoporosis. Decreased milk consumption means
that children are no longer getting required amounts of calcium in their diets. Since 1977, energy
intake from milk has dropped by 38 percent. This is the same period of time during which soda
consumption has skyrocketed. (American Journal of Preventive Medicine, October 2004)
More Sodas Lead to More Cavities. Regular consumption of soft drinks promotes tooth
decay because sodas bathe the teeth with sugar water for long periods of time. (Journal of the
American Dental Association, 1984:109-241-5)
August 2005
16.Attachment 5
News Article - Beverages In Schools
Beverages in Schools
Shortie McKinney PhD, RD, LDN, FADA and Jane Thompson RD, LDN
In the past few years, increasing focus has been placed on beverage choice in school. This has been prompted
by the suspected relationship of the consumption of sugar-sweetened beverages (i.e. soda) on body weight of
children and adolescents. For further information on the subject of sweetened beverage intake and overweight visit
the Evidence Analysis Library (EAL) of the American Dietetic Association at:
http://www.adaevidencelibrarv.com/evidence.cfm?evidence summary id=28.
Overweight and obesity are major problems for youth in the US, with NHANES 1999-2002 data estimating that
16% of US children (6-19 y) are overweight (Hedley, 2004). Data from the US Department of Agriculture (USDA)
Continuing Surveys of Food Intakes by Individuals (CSFII) show that about 66% of boys and 56% of girls (12-17 y)
drink one or more "regular" soft drinks daily (United States Department of Agriculture). Soft drinks may displace
milk and possibly juice intakes in children and adolescents (Harnack et al., 1999). Additionally, research has shown
soda may replace other nutritive beverages and contribute to low intakes of calcium, magnesium, riboflavin, vitamin
A, and vitamin C (Guenther, 1986); higher soda intake may result in higher kcal intake, which in turn may
contribute to childhood obesity (Berkey et al., 2004; Harnack et al., 1999). Soda and sugar-sweetened drinks are
readily available in many schools across the US, leading to an increasingly unhealthful environment in schools
nationwide.
The School Health Policy and Programs Study 2000 reveals that 43% of elementary, 74% of middle/ junior high,
and 98% of senior high schools surveyed have a vending machine or a school store, canteen, or snack bar. In
76.3% of schools surveyed with vending machines or school stores, canteens, or snack bars, students can purchase
soft drinks, sports drinks, or fruit drinks that are not 100% fruit juice. Nearly 50% of school districts have "pouring"
contracts that give a company exclusive rights to sell soft drinks in the district (Wechsler et al., 2001); these
contracts provide funding for school programs. In the American Public Health Association's policy statement
regarding food marketing and advertising to children, soda contracts are seen as "promoting the purchase and
consumption of low-nutrient-dense beverages while children are captive in an environment that is dedicated to
education" (American Public Health Association, 2003). The presence of vending machines, with appealing but low-
nutrient dense foods, may encourage eating habits that are not consistent with nutrition recommendations (Marie et
al., 2004).
Many school districts have enacted nutritional guidelines for beverages sold during the school day to improve the
environment within schools and positively impact student health. The small town of Appleton, WI was one of the
first school districts to enact a policy specific to the sale of particular beverages. (Appleton School District, 2003).
Soon thereafter, the New York City Department of Education (June 2003), the Los Angeles Unified School District
(January 2004) and the School District of Philadelphia (June 2004) adopted more restrictive guidelines for sale of
foods and beverages sold in all schools (New York City Department of Education, LA Unified School District and the
School District of Philadelphia). Beverage guidelines vary but typically allow only 100% juice, water, and milk to be
sold throughout the school day. Use of fruit juice drinks and sports drinks, as well as diet drinks and caffeinated
beverages varies from one school district to another.
Some school districts are interested in measuring impacts of policy change among students; however, little data
is available on this subject. One recent study presented by Spangler (Serrano et al., 2005) at the Society for
Nutrition Educators conference examined the impact of a beverage policy instituted in a West Virginia school district.
Fewer students purchased beverages at vending machines and a small increase was found in the number of drinks
bought outside of school (Serrano et al., 2005). An evaluation of the beverage policy of the School District of
Philadelphia found that although many high school students (grades 9-12) do not like the policy change, over 60%
of students believe that the policy may impact their beverage choices (Thompson et al., 2005). Fewer students
(10%) stated they bought beverages elsewhere than predicted at pre-policy, implying that convenience is a factor
that should not be discounted in beverage selection. Findings also suggest that financial impacts of policy change
may not be as dramatic for school districts as once thought.
The beverage industry has responded to the policy changes in schools in a variety of ways. To provide
alternatives for vending, new products that comply have been added and packaging has been updated to be more
attractive to children and adolescents. Beverage companies have also developed educational materials to help
promote healthy beverage purchases. One of the most important responses has been the development of a
voluntary beverage policy to restrict sales of carbonated soft drinks in schools (American Beverage Association
(ABA) August 2005). The voluntary policy allows for vendors to sell only water and 100% fruit juice in elementary
schools. Under policy, diet sodas, water, 100% juice, dairy-based drinks, and diet juice drinks can be sold in middle
schools and full calorie sodas and juice "drinks" can be made available after school hours. In high schools, where
most beverage revenue is generated (Wechsler et al., 2001), ABA policy states that students will be offered a
variety of beverages, including: water, sports drinks, 100% juice, and fruit "drinks".
17.Policy also allows for no more than 50% of the vending slots to be filled with carbonated soft drinks (American
Beverage Association, 2005). The topic of school district beverage policies is a very new topic, with little published
research. As more school districts implement school wellness policies (See ADA Wellness Policies website at
http://www.eatright.org/ada/files/ADAWellnessPolicy.pot) or specific beverage policies limiting the sale of sodas,
hopefully more research will surface supporting the positive impacts of beverage policy change. Efforts to date may
be useful in school districts nationwide as they strive to make similar changes in their school food service.
References
42 Section 1751 et seq., US Congress (2001). American Beverage Association. (2005). AMERICAN BEVERAGE
ASSOCIATION: BEVERAGE INDUSTRY SCHOOL VENDING POLICY. Retrieved August 25, 2005, from
http://www.americanbeverageassociation.com/schools/vending policy.asp
American Dietetic Association. Wellness Policies. Available at:
http://www.eatrig ht.ora/ada/files/ADAWellnessPolicv.cot Accessed November 10, 2005.
American Dietetic Association. Evidence Analysis Library. Sweetened Beverage Intake and Childhood Overweight.
Available at: http://www.adaevidencelibrarv.com/evidence.cfm?evidence summary id=28. Accessed November 8,
2005.
American Public Health Association. (2003). Policy statement 2003-17 on food marketing and advertising directed at
children and adolescents: implications for overweight. Retrieved March 5, 2005 from
http://www.apha.oralegislative/policy/2003/2003-017.pdf
Appleton School District. (2003). Appleton School District Beverage Policy. Retrieved December 1, 2004, from
http://www.aasd.k12.wi.us/SBA/Policies/341.34Student°/020Nutrition%20Policv 0/020 June%209°/0202003 pdf.
Berkey, C., Rockett, H., Field, A., Gillman, M., & Colditz, G. (2004). Sugar-added beverages and adolescent weight
change. Obesity Research, 12(5), 778-788.
Guenther, P. (1986). Beverages in the diets of American teenagers. Journal of the American Dietetic Association,
86, 493-499.
Harnack, L., Stang, J., & Story, M. (1999). Soft drink consumption among US children and adolescents: nutritional
consequences. Journal of the American Dietetic Association, 99(4), 436-441.
Hedley, AA, Ogden, CL, Johnson, CL, Carroll, MD, Curtin, LR, Flegal, KM. (2004). Prevalence of overweight and
obesity among US children, adolescents, and adults, 1999-2002. JAMA, 291(93), 2847-2850. LA Unified School
District.LA Unified School District Beverage Policy. Retrieved September 2, 2004, from http://cafe-
la.lasud.k12.ca.us/healthv.htm
Marie, S., Hunt, A., Gerald, B., & Murimi, M. (2004). Vending machine practices in Louisiana high schools. The
Journal of Child Nutrition and Management, 28(1).
New York City Department of Education.Regulation of the Chancellor, number A-812. Retrieved December 3, 2004,
from http://docs.nycenet.edu/dscqi/admin.pv/Get/File-487/A-812.pdf.
School District of Philadelphia.Beverage Policy for the School District of Philadelphia. Retrieved December 1, 2004,
from http://www.philsch.k12.pa.us/offices/foodservices/bevpol04.pdf
Serrano, E., Spangler, J., & Hosig, K. (2005, July 23-27). Changes in teen beverage consumption as a result of
school policy change. Paper presented at the Society for Nutrition Educators, Orlando, FL.
Thompson, J., Lim, S., Nachmani, J., & McKinney, S. (2005, July 23-27). Evaluation of a Beverage Policy Among
Philadelphia Foodservice MAnagers and High School Students. Paper presented at the Society for Nutrition
Educators, Orlando, FL.
United States Department of Agriculture.Food and nutrient intakes by children 1994-1996, 1998, table set 17.
Retrieved June 14, 2004, from http://www.barc.usdamov/bhnrc/foodsurvev/pdf/scs all. pdf
Wechsler, H., Brener, N., Keuster, S., & Miller, C. (2001). Food service and foods and beverages available at school:
results from the School Health Policies and Programs Study 2000. Journal of School Health, 71(7), 313-324.
18.