09-17-2019 PAECPerforming Arts & Event Center (PAEC) Interim Funding
Presented by
John Hutton, Parks Director
Ade Ariwoola, Finance Director
Brian Hoffman, PAEC General Manager
September 17th, 2019
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Timing
The timing of this issue is such that we need to bring it directly to council. Under normal circumstances, this would have come through FEDRAC committee for council consent.
Our contract with Spectra Venue Management, specifies that we are responsible for the operating fund. These costs include but are not limited to, prepayment of performance contracts
prior to ticket sales, utilities, services and payroll.
The PAEC and City planned to analyze and discuss additional funding allocation during the 2019 Budget Amendment; however initial funding has left the PAEC just short of the Budget Amendment
timeline
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Contractual Obligation
Under the Spectra management contract, Spectra acts as our managing agent for the facility, and the City retains ownership of the facility and ultimate responsibility for profit or loss.
Specifically, the City remains liable for all debts and liabilities incurred by the operation of the facility, including things such as personnel costs, utility costs, booking fees,
etc
AG 18-088 Page 11 – Article 9 – Funding
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Spectra Progress
Additional Information
Forecasted Year Over Year Subsidy Savings
January 2018 – December 2018 $ 1,126,762
January 2019 – December 2019 $ 878,855
Approx. Savings $ 247,907
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Funding Received to Date
2019 Budget - $453,855
Transfer Received On Amount Received
3/18/19 $150,000
5/13/19 $150,000
7/18/19 $153,855
Additional Funding Needed - $425,000
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Federal Way
Historical Perspective
When the Federal Way Community Center (FWCC) opened in 2007, the climate was one of challenges and doubt that was pervasive for almost two years
Starting before the 3rd year of operations, the FWCC began to make great leaps forward in every category of the business, from customer service to finances
Fast forward to today, the FWCC is rated at the top in the nation by NRPA industry standards
Original Community Center business plan was conceptual, and needed to be adjusted after 2 years of operations based on true data, versus predicted data was more beneficial. In the Community
Center’s case, this new Business Plan along with a better understanding of the current market, led to a total turnaround in budget performance.
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Federal Way
Historical Perspective (cont.)
Lessons learned by City Staff are that new facilities and business models take time to develop into thriving assets to the City and that patience and perseverance will get us where we
need to be in a reasonable timeframe.
When comparing the first 3 years of FWCC in comparison to the trajectory the PAEC is on, opening a new “City Asset” in the developing downtown is an exciting opportunity but comes with
competitive challenges. Over the next 3 – 5 years the partnership between Spectra Venue Management and the City will continue to produce a reduction in the subsidy and budget performance
turnaround.
Facilities like the PAEC are similar to King County Aquatic Center and Celebration Park. All which bring tremendous positive economic impact to our City.
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Ongoing Partnership
As we are completing the first year of our partnership with Spectra Venue Management, we have made great advances, procedurally, customer service wise and financially. We are working
on better collaboration and communication as we have talented well-meaning teams working together, though we come from two different business cultures. This situation with this timing
issue is a lesson for both Spectra Venue Management and the City.
Reasons for Optimism
Signage on the building (Thank you 4Culture, Pete von Reichbauer and Spectra)
Spectra building community partnerships (i.e. Mama Stortini’s and Chamber of Commerce)
Positive national exposure with entertainment agents and artists
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Questions
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