TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: David Chantarangsu, AICIP, Development Services Director
PREPARED BY: David Chantarangsu, AICP, Development Services Director
SUBJECT:
title
Amended and Restated Memorandum of Understanding between the City of Murrieta and Murrieta Market Nights Inc., regarding Implementation of Murrieta Market Nights
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RECOMMENDATION
recommendation
Approve the amended and restated Memorandum of Understanding (MOU); and
Authorize the City Manager to execute the Agreement.
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PRIOR ACTION/VOTE
The City previously entered into a Memorandum of Understanding with Murrieta Market Nights Inc., on December 7, 2022, within the authority of the City Manager.
CITY COUNCIL GOAL
Foster and promote an engaged, connected and caring community.
BACKGROUND
In 2022, the City entered an MOU with Murrieta Market Nights, Inc. (MMNI), to establish an on-going, regular community event in Downtown Murrieta. The event, known as Murrieta Market Nights (Market Nights), is held on the first and third Thursday of each month, however, events may sometimes be canceled due to holidays and adverse weather conditions. The event is held on City property primarily in public right-of-way on Washington Avenue between B Street and C Street, including a portion of Juniper Street on either side of Washington Avenue. Attachment 1 includes an exhibit depicting the areas to be used.
Street Fairs as a Local Economic Development Tool & Community Engagement Driver
Traditionally, community street fairs such as Market Nights are lively, bustling, and vibrant events, with a mix of food offerings and vendors selling handmade crafts, local artwork, and other unique items. This environment is conducive to attracting both local residents and visitors from outside the community resulting in increased foot traffic and business exposure enabling local shops and restaurants an opportunity to gain new customers and increased sales. Moreover, small businesses and artists that may not yet be sustainable in a brick-and-mortar format can showcase their products in street fair events fostering entrepreneurship for the next generation of artists and business owners.
Beyond the economic benefits, street fairs like Market Nights can also play an important role in building community social connections. When residents gather to enjoy a Market Night, a sense of belonging and community spirit are formed since community events are social magnets that draw people of all ages and backgrounds together. The events provide another opportunity for community members to interact, fostering social bonds and civic pride.
Additionally, there is synergy between the Murrieta Market Nights type of event and the Downtown Murrieta Specific Plan adopted in 2017. The Specific Plan establishes a vision for Downtown Murrieta as: “…a vibrant and bustling cultural center (that) serves as a place of great community pride for current and future generations.” Within the Specific Plan, there are references to several goals that are synergistic with the Market Nights concept, such as Downtown being “a destination for visitors to come relax in its casual atmosphere while strolling along tree-lined Washington Avenue - downtown’s ‘Main Street;’” with a goal of developing “…a positive image for Downtown Murrieta as a regional destination and entertainment area for families and individuals of all ages…” and “connecting cultural, civic, and commercial amenities.”
Market Night Impacts on the Downtown
For all the many benefits Market Nights can bring to the Downtown, the events also present certain drawbacks to consider. Temporary vendors may compete with established local businesses. Street circulation and accessibility can also be affected because of street closures that occur, which for Market Nights include a substantial portion of Washington Avenue in the Downtown area. Side streets connecting to Washington Avenue are also blocked between B and C Streets, resulting in limited or restricted access and detours. Noise and disruption are other potential downsides, since live music, entertainment, vendor equipment, and socializing can generate noise that impacts nearby residents. Private property parking in the Downtown can also be impacted for several hours as Market Night patrons occupy those spaces during their visit to the Downtown. Business sidewalk access can be impacted, though Market Night staff have closely monitored sidewalk access to ensure business access is not impeded by vendors, displays, or vendor equipment.
Temporary Use Conflicts with Market Nights
The City entered into the MOU with MMNI as the entity to establish and run a street fair in Downtown Murrieta. However, during the initial MOU period in 2022, the City issued a temporary use permit (TUP) for an event similar to Market Nights on private property. Staff determined that the private event conflicted with Market Nights and did not renew the TUP. While businesses in the Downtown are not restricted from operating, staff is no longer issuing TUPs for uses that impact Market Nights, given the potential conflicts with traffic control, event setup and breakdown, and operations.
MOU Terms
The amended and restated MOU carries forward all the operational requirements from the 2022 MOU but changes the financial terms. The 2022 MOU established a revenue-sharing approach between the City and Murrieta Market Nights. The approach was based on net revenue with no definition of what could and could not be considered an expense. In contrast, the agreement with Newman Hospitality Group to run events at the Town Square Amphitheater has a specific list of expenses that are considered operating costs (Section 4.f. of the Newman Hospitality agreement). After reviewing the year-end operating expenses and revenues from Market Nights at the end of 2023, a clear distinction could not be made between the general operating expenses of MMNI and the operating expenses of the event. After further consideration by staff and discussion with MMNI, staff recommends that only a $100 monthly license fee be retained in order to allow MMNI to continue to invest in vendor recruitment and attraction, advertising, and brand building for the long-term sustainability of the event.
Staff recommends this approach be implemented over the next two years. This will provide Market Nights with the time and resources to grow the event and ideally become more popular, increasing foot traffic to the Downtown and providing business exposure to brick-and-mortar businesses located there. In 2023, the event would have needed to generate $100,852 in net income for the City to recover its costs.
The MOU can be renegotiated, and the City can re-evaluate its cost recovery goals after the proposed MOU term which expires in November 2026. The City could also reconsider its cost recovery needs if the event is expanded (MOU Section VII.D.)
City Expenses for Market Nights
City expenses for every Market Night event encompass staff time to place and remove traffic control barriers and maintain public trash receptacles in the Downtown. The Murrieta Police Department (MPD) will assign two (2) officers to patrol this event. The regular ongoing City expenses are estimated to be approximately $5,490 per event.
Conclusion
While the City will spend approximately $120,800 per year in staff time to support Market Nights, staff’s analysis is that there is tangible community benefit generated by these events. By analyzing cell phone location data on Market Nights, staff can determine that roughly 7,000 people attend Market Nights per event, or 154,000 annually (based on 22 events), though attendance can fluctuate based on weather. More anecdotally, restaurant owners in the Downtown have told staff they see an increase in sales when Market Night events are held. Business outreach conducted by Economic Development staff in the Downtown area indicates Market Nights are favorable.
Businesses often measure the cost to “acquire” new customers through marketing, sales, and operational costs over a specific period. If the City’s estimated cost of $120,800 to support Market Nights to attract 154,000 people to the Downtown were viewed as a customer acquisition cost, that amount is approximately $0.78 per person. In contrast, according to industry standards, the retail industry may spend $10 to $50 per person to acquire a new customer. While the comparison may not be like-for-like, it is sufficient to conclude that continuing to have a Murrieta Market Nights is a benefit to the Downtown, and promotes a sense of community and civic pride by creating an atmosphere that brings residents and visitors together.
The proposed MOU with Murrieta Market Nights, Inc. is attached as Attachment 1 for the City Council’s consideration.
FISCAL IMPACT
Staff estimates the City provides nearly $120,800 per year in direct costs to support Market Nights. The amount is derived from set-up and take-down charges for traffic control, trash receptacle service before and after the event, monthly trash service, and public safety officers. The Public Works Department and Community Services Department estimates the cost to be approximately $4,500 in staff time per event to set-up and take-down traffic controls and maintain trash receptacles in the Downtown. Waste Management also provides a dumpster at a value of approximately $150 per month. Public Safety costs include two assigned police officers for each event.
ATTACHMENTS
1. Proposed Memorandum of Understanding