06/25/1980 Meeting - Laserfiche WebLink

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~ Mr. Kupper stated the conference center consists of about 35,000 square feet. . This figure was derived from a study done for the Civic Center in 1977 by Economic Research Associ ates. The study shows there is a strong market for conference center business. They decided that they should go with the 35,000- square-feet figure due to the new Lane County facility and due to the City's budget, since it would cost $82 to $100 per square foot. The center will be subject to architectural review but it probably will contain a main ballroom of 13,000 to 14,000 square feet, a smaller ballroom of 5,000 to 8,000 square feet, and the rest will be the lobby, etc. The concept of this center adjoining the hotel is patterned after Monterey, California. - In regard to cost and revenue, Mr. Kupper indicated the council had received a memo showing what the long-range impacts might be. This information has two scenarios--a worst case and a best case. The worst-case scenario would be a catastrophe scenario and extremely unlikely to happen. This would mean the payroll and operating cost would increase 15 percent per year and that revenues would increase less than five percent per year. He feels the best-case scenario is more likely what will happen. He would say that in no instances have the figures been II puffed; II reasonab le revenues were used and mi nor def ic its wou 1 d be shown in the first five years, He feels it is important that the City understand what could happen. He feels that the economic impact generated by existence of the hotel will offset any deficits. The council should not assume that the worst-case scenario would never happen. This morning, staff and the developer talked about devising a way in which the City might have a way of escaping overwhelming deficits. They agreed in principle that the City would establish a base line and if operating deficits exceeded that amount, then the _- developer would either pick up the excess deficit or the entire conference center would be turned over to the developer. The developer has said that is reasonable and they would be glad to do that. This would be a- good-faith agreement since there is no time to include it in the contract. Mr, Kupper indicated Mr. Long felt there should be a letter of understanding to this effect. " Mr. Lieuallen asked if the operating deficit would include operating expenses over and above the rent or if room tax and/or other items would be included. Mr. Kupper stated that other revenue flowing through the City would be included as we 11 . Mr. ,Lieuallen asked if a definition of net terms of operating deficit after all figures were entered in would be the mechanism used. Mr. Kupper responded that that could be used as a basis. Mr. Lieual1en asked what the magn i tude of the City's 1 i abi 1 i ty wou 1 d be in order to get to the po i nt that the City would be allowed to get out of the contract. He asked if Mr. Kupper was confident of the figures. Mr. Kupper responded they are assump- tions. The hotel payments are based on a feasibility study which is the basis on which lenders loan the money to the developers. Room tax figures are based on calculations from gross revenues from the Hilton Hotel only. Commerc i al leases would go for about $10 a square foot and there are about 6,000 square feet of commerc i al space avail ab le. Conference roan rental is a "guesstimate" based on Monterey and Pasadena. The catering contract is based on 10 percent of the food and beverage and is an estimate. Parking revenues are based on monthly rentals as available and they might also be low, . 6/25/80--7