Okaloosa County BOCC — April 28, 2016 — I. f. Allegiant Contract — reading text

TOURIST DEVELOPMENT DEPARTMENT MEMORANDUM DATE: April 28, 2016 TO: Tourist Development Council FROM: Ed Schroeder, Tourist Development Department Director SUBJECT: Allegiant Air Contract STATEMENT OF ISSUE: Request approval to enter into a contract with Allegiant Air for the provision of paid media services to promote the Sub-County Taxing District. BACKGROUND: In October 2015 the Interim Airports Director presented a request to the TDC for funding to bring new airline service and points of origin to the Destin-Fort Walton Beach airport. The airline recruitment package included the airport waiving all fees for the first two years, a VisitFlorida incentive package, and TDC marketing funding. As a result of the three-pronged incentive package offered, Destin-Fort Walton Beach airport was successful in securing Allegiant Air. On January 12, 2016 non-stop service twice per week to St. Louis and Cincinnati during late May – early September was announced. The high demand for those routes led to an additional day of service and the season being extended through mid-October. In March, non-stop service to Memphis, Oklahoma City, Knoxville, and Fort Lauderdale was announced for late May through mid-August. Demand and advance bookings may result in an extended season, as occurred with the first two routes. Allegiant has verbally committed to starting the 2017 season in March and has already demonstrated that seasons will be extended as demand warrants. At its April 19 meeting, the BCC approved the Airline Operating Agreement for Allegiant Air, LLC. A second agreement has been drafted to memorialize the County’s commitment of $3M in tourist development tax dollars for paid media services to market Destin-Fort Walton Beach airline service in the aforementioned markets. BUSINESS/ADVERTISING PLAN: Allegiant’s call-to-action for advertising is to drive customers to www.allegiantair.com only.  Allegiant’s advertising must comply with FAA regulations for fare-based advertising. Therefore, Allegiant will develop all creative at no cost to the County, and the County will reimburse the actual cost of paid media placements.  On a quarterly basis in advance, Allegiant will provide a Media Plan identifying the media type, market, unit, impressions, and cost.  The Media Plan will be presented to the TDC and BCC for approval, similar to the process for the County’s Strategic Marketing Plan.  For each specific media placement, Allegiant will email the TDD Director the media buy sheet and associated creative. The media buy sheet will be approved in accordance with the County’s procurement approval thresholds and the creative will be approved by the TDD Director.  The TDD Director may waive the Emerald Coast logo requirement on a case-by-case basis when approving creative.  Quarterly reporting of advertising and marketing services and relevant performance metrics (e.g. incremental web traffic, conversions, flights in/out by point of origin, percentage of deplaning passengers who booked lodging in Okaloosa County) will be provided to the County within 30 days of quarter-end. FUNDING:  A $1.5 million ad spend from May – December 2016 (launch year, with strong peak months and lighter off-peak months )  A $1.5 million ad spend from January – December 2017 (maintenance year, with media presence in peak months only, except Cincinnati also has radio in off-peak months).  The media mix is TV, radio, and out-of-home. TV only in peak months and excluding very expensive markets (St. Louis and Miami-Ft Lauderdale).  Preliminary media plan attached. LODGING OFFERINGS ON WWW.ALLEGIANTAIR.COM: The hotel search option will be deactivated for Destin-Fort Walton Beach (VPS) until programming is in place to ensure that Okaloosa County lodging properties (hotels and rental management companies) appear prominently (i.e. before those of neighboring counties) on the Hotel section of the website. Pursuant to section E.200 of the TDD Manual, the Council shall review and provide a recommendation for all proposed contracts requiring Board approval. The TDD attorney has reviewed the draft contract but not yet prepared a blue sheet since Allegiant has requested clarification regarding the public records provision. To facilitate placing this contract on the May 3 Board agenda, Council approval is requested contingent upon legal acceptance of any further changes and completion of the County contract coordination process. OPTIONS: Approve or Deny RECOMMENDATION TO BCC: Approve a two-year contract (January 2016 – December 2017) with Allegiant Air for the provision of paid media services to promote the Okaloosa Sub-County Taxing District, contingent upon legal acceptance of any further changes and completion of the County contract coordination process.  AGREEMENT FOR PAID MEDIA SERVICES TO PROMOTE SUB-COUNTY TAXING DISTRICT This AGREEMENT (the “Agreement”) is made and entered into on the effective date below by and between OKALOOSA COUNTY, FLORIDA, a political subdivision of the State of Florida (the “County”) and ALLEGIANT AIR, LLC, (the “Contractor”) relating to Sub- County Taxing District paid media services as more particularly set forth herein. WHEREAS, the County finds that supporting the advertising and marketing efforts of the Destin-Fort Walton Beach airport is an essential component of promoting the sub-county taxing district as a tourist destination; and NLY WHEREAS, new points of origin at the Destin-Fort Walton Beach airport enhances the destination’s ability to attract tourists from those markets; and O WHEREAS, Contractor has committed to providing new points of origin to the Destin-Fort Walton Beach airport; and N media services as more fully set forth herein. IO WHEREAS, the County seeks to engage the Contractor for the purpose of providing paid SS NOW, THEREFORE, in consideration of the above and mutual covenants contained herein, the County and the Contractor agree as follows: Section 1. CU Recitals. The above recitals are true and accurate and are incorporated herein as essential terms of the Agreement. Section 2. DIS Scope of Services. The Contractor shall undertake the paid media services as set forth in EXHIBIT A attached hereto and incorporated by reference. Section 3. R Term. This Agreement shall be effective on January 12, 2016 and shall terminate FO on December 31, 2017. Either party may terminate this Agreement with or without cause and without further obligation, by giving thirty (30) days’ written notice to the other party (the “Notice of Termination”). If the Notice of Termination is related to a breach or default under AF this Agreement, and if either party requests in writing, the parties shall meet within the 30-day notice period to discuss the Notice of Termination. In the event the parties reach a resolution, T the Notice of Termination shall be deemed null and void. In the event the parties are unable to reach a resolution, upon mutual agreement of the parties, the parties may enter into mediation. R Section 4. Compensation and Invoices. D a. The County agrees to reimburse the Contractor an amount not to exceed THREE MILLION DOLLARS ($3,000,000.00) for actual paid media placed between January 12, 2016 and December 31, 2017 pursuant to EXHIBIT A. b. The parties agree the County will not reimburse the Contractor for actual paid media placed after December 31, 2017 without prior written approval by the County. c. Contractor will be reimbursed for the actual paid media with no markup costs. Reimbursement shall be paid to Contractor after expenses have been incurred and upon Page 1 of 8  receipt of an invoice. Invoicing detail shall be in sufficient detail for pre- and post-audit review (e.g. copies of vendor invoices, proof of performance, advertising materials) to insure the services were performed and that the correct amount has been invoiced. Contractor to submit recapitulation of credits affecting previously submitted invoices. d. In the event a portion of an invoice submitted to the County for payment to the Contractor, as specified above, is disputed, payment for the disputed amount may be withheld pending resolution of the dispute, and the remainder of the invoice will be processed for payment without regard to that portion which is in dispute. Section 5. N Non-Appropriation of Funds. Notwithstanding anything contained in this LY Agreement to the contrary, in the event the funds appropriated by the County through the Tourist Development Department are insufficient to pay the costs of this Agreement, the Agreement shall terminate on the last fiscal quarter period for which appropriations were received, without penalty or O expense to the County of any kind whatsoever. However, the County will reimburse the Contractor for any and all media costs that the County previously approved and that have been expended by the Contractor. N The County will immediately notify the Contractor of such occurrence. Notwithstanding the foregoing, the restrictive covenants of this paragraph are limited to the IO Okaloosa County Tourist Development Council Trust Fund and nothing herein shall be applied to the General Fund or any other special fund controlled by the County. Section 6. SS Independent Contractor. It is mutually agreed that the Contractor is and shall remain an independent contractor and is not an employee or agent of the County. Section 7. CU Audit. The County shall have the right from time to time at its sole expense to audit the compliance by the Contractor with the terms, conditions, obligations, limitations, restrictions D and requirements of this Agreement and such right shall extend for a period of three (3) years after IS termination of this Agreement. If material improprieties are discovered during the audit, and the Contractor does not dispute said improprieties, the Contractor shall reimburse the County the cost of the audit. R Section 8. FO Public Records. The Contractor shall comply with and allow public access to all documents, records and other materials, subject to the provisions of Chapter 119, Florida Statutes, prepared or received by the Contractor in conjunction with this Agreement. Specifically, AF Contractor must: T 1. Keep and maintain public records required by the County to perform the service. R2. Upon request from the County’s custodian of public records, provide the County with a copy of the requested records or allow the records to be inspected or copied within a D