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HomeMy WebLinkAboutMin - CC - 1991.05.222L5 1 CITY OF BI'RLINGAME CITY COIJNCIL STUDY }{EETING wednesday, YIay 22, L99L, 7:30 p.n. City HaII counci] chambers Mayor Gloria Barton convened the study session of the Burlingame City Council in the City Council charnbers at 7:35 p.n. Because of the size of the audience, the neeting was moved from Conference Room A. PRESENT: COUNCILI.{EMBERS BARTON, HARRISON, LEMBI, O |}{AHONY, ABSENT: COI,]NCILMAN PAGLIARO STAFF PRESENT: OT}IERS PRESENT: ARGYRES, KIRKUP, MONROE JOHN KAATZ, COOPERS & LYBRAND,. REPRESENTATIVES OF VITIELLO & ASSOCIATES, BARTON-ASCHIUAN ASSOCIATES, AND HANSCOI4B ASSOCIATES PRESENTATTON DRAFT COOPERS & LYBRAND STUDY MARKET AND FINANCTAL ANALYSIS BT'RLINGAME CONVENTION CENTER Mayor Barton recognized Convention center conmittee co-chairman Irv Amstrup who wished to address the council prior to thepresentation. Past Uayor Amstrup thanked the conrnittee members for their work and indicated that he and Dave l,[artin had agreed that once the consultant report was presented that the committeers work was conplete, he was therefore subnitting his resignation as chairman, leaving it to the city council to continue the project frorn here. The Mayor accepted his and the comrnitteers resignation indicating that the Council nay look to then in the future for additional assi.stance. councilman Harrj-son also thanked chairman Amstrup and the committee. The city Manager introduced John Kaatz of Coopers & Lybrand to rnake the report presentation. In January, Council asrarded a contract for the feasibility study and the consulting team included Vitiello & Associates as architects, Hansconb Associates as cost estirnators, and Barton-Aschman as traffic consultants, In the past five months, the team has met rrith a subconmittee of the original convention center committee to prepare the draft study. The purpose of tonight's meeting was to review the draft report and ans$/er any questions council or public may have. John Kaatz presented the findings and concLusions of the study. He indicated that the study confirmed some of the work done by the conmittee on the market demand for a facility at various sizes. The rnarket study concluded that a facility v/ith 50,000 square feet of exhibit space plus 25,000 square feet of rAeeting, and a 25,000 square foot ballroom was most narketable for the Burlingarne area at this tine. He noted that the market could support as much as 75,000 square feet of exhibition space; therefore, the phase 2 proposals look at 75,000 square feet of exhibition space. He then introduced Ralph vitiello and Jane Mountrose of Vitiello and Associates, architects, to review the structural facility needs and to review the five sites that had been evaluated with their various advantages and disadvantages. Site 1 was approximately 11.1 acres located across frorn the Marriott Hotel . site 2 y/as approxinately 7.1 acres adjacent tothe Hyatt between Bayshore Highlray and Bayshore freeway. site 3 was 6.5 acres located on Airport Boulevard adjacent to the Bayfront lagoon and Sanchez channel. site 4 was 16.3 acres and located on the drive-in site adjacent to Sanchez channel. site 5 r^ras 6.3 acres including the former Amfac Hotel site plus sorne adjacent property. of aII the sites, site 5 appeared to be the most constrained given the project size and proposed layout. Roger MarshaLl of Barton-Aschnan indicated that the traffic hrork 2L6 had concluded that a parking requirement of 500 spaces was necessary for phase one. This number of spaces was based on the facility serving a regional and state neeting rnarket lrith 50 percent of the participants being non loca1 . From a 1oca1 systen capacity traffic standpoint, the sites to the north appeared best and those to the south of the sanitary Iandfi11 the worst. The representative of Hanscomb Associates reviewed the construction cost estimates on the five sites, including any necessary dernolition costs. Construction costs were in 1991 dollars and ranged on the various sites fron $59.3 nillion to $67.2 million for phases one and two. John Kaatz reviewed the financial analysis of the proposedproject. Assurning 50,000 square feet of exhibit space, 25,000 square feet of meeting space, and 25,000 square feet of ballroom space, the project cost ranged fron $55 nillion to over 9100rnilfion including land, financing, and demolition. The operating expenses would exceed operating revenues by approximately $4oo,oo0; such a deficit is typical of this size faciJ.ity. Assuming hotel tax was increased from the current 8 percent to 12 percent level,, $3.2 million would be available to offset the operating loss and be available for debt service. Assuning debt service on the project and a deficit on the operation, there would be an annuaf loss of $2-5 nillion for the sites with a balfroorn. For the sites without a ballroom but with 50,000 square feet of exhibition space and 25,ooo square feet of rneeting space, the annual loss would range from $1.1 nillion to $2.8miLlion for phase 1. The proposed annual loss is typical offacilities this size; the loss in operatinq costs is a bit better than sorne cornparable facilities. The economic impact to the area would both cone fron direct expenditures and multipliers of those dollars spent as well as from affects increasing ernployment, tax collections, andearnings. It is estimated that over $50 rnillion annually would occur j-n direct spending from users whereas $160 million would be the total economic effect with multipliers. llost of this economic impact wouLd be in an area Larger than the city of Burlingame. The convention center was estimated to generate $4.2rnillion in sales tax throughout the economy, whereas the cityrs share of this total taxable spending is estinated to be $500,000annually (taxable sales actually occurring in Burlinqame). He then reviewed the various financing options, both private andpublic, to offset the expected deficit. He indicated that the funding package wouLd need to be very creative to make anyfacility a real ity. Lastly, he reviewed the various facility rnanagernent options availabfe to the city if a conventi,on center were built. TheCity council then comrnenced to ask questions. Mayor Barton questioned whether the study considered the existing 100,000 square feet of neeting space available in various locations in the city. l{r . Kaatz indicated that it was irnportant that we address the users need which is looking for all the facilities on one site. The existing scattered space does not neet the needsof the exposition/meeting rnarket we are trying to address. Council,man Lernbi questioned why we needed a ballroom. IIe indicated that he had discussed this with Rod Young of the Hyatt and asked that the Hyatt manager address this issue. Rod young stated that it is very important that the facility have a ballroom to provide the needed flexibility to feed on site the various convention groups while they're meeting. with their other bookings, the hotels cannot manage feeding the large number of people in the short tine required. Mayor Barton stated that she thought sites 2 and 5 appeared to be the best and questioned whether the consultants agreed. consultants indicated that these were definitely the most central sites. Councilrnan Lembi asked how j-mportant the marque (street visibility) value of the site was. The architects indicated it 2L7 Mayor Barton indicated that enotionally she could buy the idea ofa convention center and has a personal preference among sites,but the hard part would be the financial considerations. Shefel-t that only with private participation lrould the project bepossible. councilman Harrison indicated that he had net with the newly formed Hotel council and felt that the hotels should lookat rnaking a dj-rect contribution to funding, nore than just thehotel tax. He also felt it.was important to approach other communiti.es which would benefit and consider the formation of ajoint powers agency. Mayor Barton stated that Burlingamers budget is not as large asthat of San Jose or Santa clara and cannot absorb the loss, andthat we rnust have private participation. she wants to see theproject work. councilnan Lernbi indicated that he had rnet with the hotels and it lrould be very difficult in these econonic timesto expect hotels to contribute directly. Ile felt a need for additional expert assistance on the financial considerations. Mayor Barton questioned the committee members about whether there had been any indication of private sector willingness toparticipate. Chairnan Amstrup indicated that there had beeninterest, but no conmitment was possible until the position ofthe council was known. Comrnittee member Joe Harvey stated thatthe council needed to qet a commj-tment on the possibility of ahotet tax increase before private parties could proceed anyfurther. Mayor Barton asked for any comments or assj.stance fronthe public attending. Joe Karp indicated that he had many questions concerning theproject and that there were Lots of unknowns. He indicated that it would take at least three to four years to develop a project of this type and he was against placing the hotel tax issue onthe ballot unless you had nore answers to the unknowns. He felt no one hranted anynore Barry Sil-vertons. Mayor Barton stated that we need private investors, but the first step may be the need to authorize the hotel tax increase. Counci-lnan Harrison indicated that he liked the Arnfac site and would be ready to commit to a four percent increase in hotel taxbut that we needed unani.rnous support of the city council and answers to additional guestions. Joe Harvey indicated that the cornrnittee had taken a different approach, assumed an increase inthe hotel tax and then calculate how much building/ facility you could afford. John Kaatz responded that they had looked at theproject from this perspective. He went on to comment that there would be no market support for a facility of 30,000 square feetor less. He indicated that the city would need at least 40,000 square feet of exhibit space with support facilities to capture a reasonabl,e segTment of the market v/e were looking at. John Steen of the Convention and Visitors Bureau commented that he felt that the study financial estimates T^rere veryconservative. If the hotel tax were increased and fundsgenerated during the four year period before the facility would be into the ground, funds would be available to offset certaincosts. Joe Karp stated that if the Council wished to place the hote1 tax increase on the ballot with the understanding that theproject would only proceed if questions were addressed, he coul-d was very irnportant. Councilman Harrison questioned how much square footage within the facility was lost by the size and configuration of the Amfac site. consultants indicated that thesite was smalLer constrained by the presence of BcDctsjurisdiction and had difficult truck access because the trucks and patrons cars had to mix in circulatingr on the site; and theyalso noted that there was additional costs for phase 2 because construction of the expanded facilities over the exposition space may cause the facility to have to be closed for a period of tine. Councilwoman otMahony addressed the problen of phase 2 on the Amfac site and indicated that it would be very difficult. Possibly hre need to took at noving the parking to other adjacent areas. Councilwoman orl"Iahony felt that the econornic impact is greater than Burlingame and we needed to pursue the possibility of ajoint powers agency for funding. She favors a Novenber electionfor the hotel tax increase to develop seed money. She felt that lre shouldntt wait for private sector participation and agreedthat additional financial expertise nay be needed. John Kaatz asked council to clarify rrhat additional econornj.c analysis would be desired in the final report. He stated that the current nodel includes increasing rates and occupancy as a result of thefacility. Dan McHale of the Ramada reiterated that Burlingane is uniguewith i,ts airport location and number of existing hotels. He asked whether it was possible for the city to share sone of theexisting 8 percent with the project. He also indicated that the hotels may wish to have a two-thirds vote because it would guarantee that funds raised would go onJ-y to convention facilityor tourist pronotion activities. Stan Moore of the Marriott felt that meeting planners should be involved in site selection. Any facility must be within walking distance of the headquarters hotel. We should also consider the need for future expansion on any specific site. Marti Knight feLt it woufd be hel-pfu1 to the public if there weredefinitions of the difference between exhibit/trade show users versus concert users. The relative traffic inpacts of different users should also be addressed. John Steen stated that he couldsell a less expensive no frills convention facility. Mayor Barton thanked the audience for their participation andideas. She felt that we needed to hear fron the hotels abouttheir preference for a rnajority vote general fund tax or two-thirds vote for a special restricted tax for the hotel tax. The CounciL directed that the city Manager place a discussion ofpossible hotel tax increases on the next councj.l agenda. ADJOURNMENT The rneeting was adjourned at 10:19 p.n Judith A. Malfatti city cLerk 2L8 support this idea. Rod Young, Hyatt manager, stated that a convention center would put Burlingame on the map. He noted that you nust consider the possibility of increased room rates which for conventions are higher than for transients, and that these would generate additional room tax revenue. Councilman Lernbi felt that our airport location was very positive for convention facilities and that Burlingame was unique because we had such an existing supply of hotel rooms. uayor Barton indicated that the bottom line was how do we do this financially. The council needs to decide rrhether to put the hotel tax increase on the ballot. council discussed the types of choices for ballot measures including the rnajority vote requirement for a general fund tax and a two-third vote requirernent for a special dedicatedtax. councilnan Harrison indicated that he favored a majority vote versus the two-thirds. Joe Harvey indicated that he favors increasing the hotel tax. Councilman Lembi indicated that he f el-t that we needed expert financial advice on both the upside and the downside of any approach to the proposal of how to increase the hotel tax.