HomeMy WebLinkAbout2003-02-04 Business and Economic Development Committee Minutes � BUSINESS AND ECONOMIC DEVELOPMENT COMMITTEE
TUESDAY, February 4, 2003
Meeting Minutes
Councilors Attending: Frank Farrington, John Rohman, David Nealley, Michael
Crowley, Dan Tremble, Richard Greene
Staff Attending: Ed Barrett, Jonathan Daniels, Mike Dyer, Norm Heitmann
Others Attending: Gagnon, Buckley
The meeting convened at 5:00 p.m.
1. Discussion on the privatization of management at Bangor Auditorium and Civic
Center/Eastern Maine Arena and Convention Center.
Daniels said that this is an issue that takes into account the current facility as
� well as the potential for the Eastern Maine Arena and Convention Center. It is
taking a look at a vision of how we want to look at management options now
and in the future. He noted that this is not a reflection on the current
management, because Mike Dyer and the crew have done a fantastic job. They
have taken the facility far beyond what people thought they could do with it.
The level of shows and the cleanliness of the facility are a testament to the crew
we have in place. The issue of private management was brought up over a
decade ago, with Center Management Corp. and Erin Inc. submitting bids. The
City was close to turning the management over to Center Management. Due to
unforeseen circumstances and the changing economy at the time, Center
Management wanted to increase their management fee, and the City balked at
this idea. He said that we need to look to the future, and we need to reevaluate
whether this option should be explored. He said that a lot of arenas and
stadiums throughout the U.S. and the world are going to private management.
Recently, Daniels said that he was at the Verizon Center and SMG is a private
management company that manages that facility. He was able to see how they
run their operation, 30,000 people in a 24-hour period. He noted that SMG is
interested in the new facility as well as the current facility. They are interested
in evaluating our situation, make some capital investments, try to raise some
revenues, including evaluating the Civic Center, the Auditorium and the Bangor
� State Fair. That gives them an opportunity to be involved with us in consulting
� and evaluating the development and implementation of the new facility. SMG
has sent us severai pieces of information regarding their services. They operate
the Verizon Center, the Worcester Centrum, the Congress facility in Lowell as
well as many others.
Rohman asked if SMG was the only company that we had heard from.
Daniels said that he has not heard anything as of yet. Dyer said that he has
heard from Market Allies' Frank Rousseau who was involved in the Center
Management thing 11 years ago.
Rohman asked about the State Fair. Daniels said that the State Fair was
evaluated with SMG. Some of the information that they have provided indicates
that the State Fair is one aspect of the project that they feel they can make an
impact. SMG does operate some state fairs and joint arenas. If the City is going
to bring in private management, they should not divide the three entities of State
Fair, Auditorium and Civic Center, and that we should transition all aspects of the
operation.
Crowley referred to a council resolve concerning some public assembly facilities
that might be co-mingled in terms of management, so that we have consistency
� and eliminate redundancies in management. He said that arena, conference
facilities, fair grounds and amphitheater should be a possibility for private
management as a group.
Farrington asked what is the impact on the current employees and staff, what
does SMG bring to the table that we don't have now, what are the negatives of
having private management, and what is the fee and the impact of the City's
ownership. Barrett said that in terms of current employees, that most of the
time when you privatize a function, the private management company would at a
minimum commit to giving priority to current employees. Barrett said that we
have had a tremendous improvement in the service side of Bass Park operations
over the last 4-5 years and that is a credit to Mike Dyer. In terms of what these
groups bring, is the contact that they have at the national level and can package
tours and events into the community, purchasing power, and the opportunity to
increase revenues. They often will offer some investment in the facility as to
areas that will improve revenues. There will be a management team, and a
revenue/increase sharing proposal, similar to the parking garage agreement.
Last time we sent out a request for proposal and then you end up going through
a negotiating process.
Nealley said that with SMG having so many facilities that they manage in the
. region, they would benefit from the overflow of events. Barrett said that the
� current subsidy of running the facility were $370,000 per year and the kinds of
proposals we would receive depend upon what other areas that these companies
might want to see improvements. He said that profits would be subject to the
proposal. With the discussions of the new facility, and talks with HOK, Bangor
has raised its profile and word has spread and SMG became interested. SMG did
not send a proposal last time. Barrett cautioned that we consider the timing of
request for proposals with our negotiations with Capital 7.
Nealley said that during a transition of this kind, there should be some
responsibility to place current employees into positions with the private
company. He said that we keep referring to and arena and convention center
and how does this figure into the Capital 7 proposal. Barrett said that the
agreement with Capital7 will be along the lines of what they proposed which is
to establish a conference center in their phase 2, dependent upon the
referendum. If you look at the private management companies, a lot of them
would say that arena management is better deal than conference center
management, due to the expense. Conference centers are designed to bring
people into the community and spend money at the malls and shops. Arena
management is designed to make money on bringing in large numbers of people
to an event over a short period of time without a large staff supporting people
over period of time. Dyer said that an event facility would be much easier to
� break even or return a profit. Rohman asked Dyer if he was familiar with SMG.
Dyer said that he was and that they had been around awhile, and it is one of the
better known management companies in the industry.
Tremble said that he thought Dyer has been helpful through this process.
Crowley said that he is detaching the discussion from what we are currently
doing, and thinking more outside of the box. We are talking about a lot of things
very difFerently. He said that talking about privatization might have a contrary
impact on our employees, it might be an incentive to keep our employees. He
said that during the discussions that we would look at this as an opportunity to
retain our current employees. He said that we are talking about a facility that
will have a very serious impact on the economy, and that we can not move in
that direction with empowering the current staff with new ideas. We have an
obligation to be more fiscally responsible. He said that these are all good
reasons to pursue privatization, and the timing of tentative developer status for
Capital 7, and that if we move this forward these should dovetail nicely. We
should move this forward as soon as possible.
Rohman said it seems like we are building a consensus here and said we should
get a recommendation for full council after hearing comments from Barrett and
, Dyer.
•
Barrett said that the people of Bass Park bring some real skills that a company
coming in to a new market would be looking for. They know the market, the
facility and the Bangor State Fair. The reality of the situation is that Bass Park is
going through some difficult times due to the funding problems. The staff does
not have a career ladder, and the possibility of being part of a larger company
with the possibility of growing in that field is an advantage. Barrett said that he
is comfortable that current staff will be integrated into the new system.
Dyer said that on behalf of everyone at Bass Park, they appreciate everyone's
concern. He said that they encourage the council to move forward and pursue
this process. A private management company may look at certain events and
say that these are dragging you down, however certain groups from the
community are going to want to have their events remain a part of the
operation. We want to make sure that we do not drive community members
away from the search for a new facility. �
Tremble said that he was concerned about the staff's reaction and asked Dyer to
convey the Council's feelings and what the process is about.
Nealley said that when we are trying to re-engineer government to get things
� more efficient and to save money for the taxpayers, it is not our top concern to
worry about staff's feelings. He said that this company would be doing itself a
favor to hire as many of our people as possible. If it comes down to this, it's
possible to work this into the negotiations and possibly hire these people for a
period of time so that the severance package ends up in the private sector not at
the cost of the City. He said that with the City dipping into the general fund to
help out the charitable organizations that use the Bangor Auditorium/Civic
Center, such as the United Way, and wondered how they would handle having to
go to the private sector enterprise and make requests of them. He said it's one
thing when the United Way asks for pledges but it's another thing when we take
tax dollars to subsidize something for the United Way. He said that when we
subsidize the United Way, that there is nothing even close to moral or ethical
about it, because those people really have no say as to what we did with their
money. They can vote us out, and some people say it's a good cause, but he
said it is not the place for the taxpayers to write out checks for charity. He said
it is not the taxpayers' responsibility to fund community organizations/events.
He said that he was fully supportive of heading in the direction of privatization,
however they are in the business to make money and we should not be moving
tax dollars from the general fund for these events.
Crowley moved that we submit this issue for an RFP at the earliest convenience.
� This was seconded. Rohman asked if the Committee wanted to move to full
� Council the RFP for privatization of the complex. Farrington wanted to specify
the RFP privatization of what facility. Crowley said his intent was for RFP for
privatization management of the Bangor Auditorium/Civic Center with some
accommodation in the RFP for future management of new facilities. Barrett said
that procedurally, he recommends staff start a process of drafting up an RFP to
come back and deliver it to this Committee. The Council should adopt a resolve
providing the direction that we want, and then we can go through the details
with this group.
Tremble commented that with the budget year that we have coming up, that we
might want to go through this process with some of our other enterprise funds
as well. There is a possibility of privatizing the golf course and the airport. He
noted that the golf course makes money, but maybe it could do better, and if
there are companies out there interested in taking these over we should do an
RFP for their services. Barrett said that there are companies that do private
management of municipal golf courses. The Airport is a little bit different. He
said he knew of Lockheed managing a New York airport. The FAA has
authorized a limited number of airports to be privatized.
Nealley asked that a request for proposal to privatize the golf course go before
the Government Operations Committee. Barrett said that we could put together
� a briefing paper on both issues, however he would like to allow the staff of those
departments to be present during any discussion.
Crowley recommended to keep the RFP to one issue, and move forward with the
Bangor Auditorium/Civic Center RFP. Tremble noted that his intent was merely
to raise the issue, not to have any action by the Committee at this time.
The Committee approved sending the RFP for privatization management of the
Bangor Auditorium/Civic Center to the full Council for consideration.
The meeting adjourned at 5:56 p.m.
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