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Home My WebLink AboutCC January 7, 2004 C I T Y 0 F NDOVE 1685 CROSSTOWN BOULEVARD N.W. . ANDOVER, MINNESOTA 55304 . (763) 755-5100 FAX (763) 755-8923 . WWW.CI.ANDOVER.MN,US CITY COUNCIL MEETING JOINT COUNCIL/STAKEHOLDER MEETING COMMUNITY CENTER WORKSHOP COUNCIL CHAMBERS Wednesday, January 7, 2004- 6:30 p.m. AGENDA , / 1, Call to Order 2. Approve Agenda 3. Architectural Design Update 4. Construction Manager Update 5. Facility Security Overview (presented at Meeting) 6. Site Plan Traffic Movement Scenarios - (presented at Meeting) 7. Concession Discussion (Attachment) . 8. Other Business Items a. Sunshine Park Ballfield Lighting Budget b. Capital Campaign Update c. YMCA Daily Pass Concept d. Anoka-Hennepin Team Room Space e. Ice Arena Staffing/Rental Contracts 9. Adjourn / , " ) 1685 CROSSTOWN BOULEVARD N.W. . ANDOVER, MINNESOTA 55304. (763) 755-5100 FAX (763) 755-8923 . WWW.CI.ANDOVER.MN.US TO: Mayor and Council Members FROM: John Erar, City Administrator SUBJECT: Concession Operation Alternatives DATE: January 7, 2004 INTRODUCTION The City Council has been approached by the Capital Campaign to consider leasing of the concession space as another means of raising revenues that could then be contributed to the capital campaign effort. DISCUSSION Details regarding this proposed combination of privately leasing the concession space, selecting ) a service provider and the contribution of "assumed" retained earnings to the capital campaign has generated numerous questions that need to be carefully considered, before any specific action is taken. In discussions with the City Attorney, Finance Director and others, the following points and questions have been identified. · The City Attorney has indicated that the selection of a service provider cannot be based on what a service provider mayor may not choose to contribute to a separate campaign effort. That is there can be no appearance of any type of quid pro quo arrangement in the vendor selection process. A service provider or contractor should be selected on the basis of the service they are offering to provide, and not on any separate financial considerations. · The RFP should be reviewed by City staff and the City attorney's office and should follow established governmental publication and selection processes with bona fide selection criteria. Selection of a service provider is typically handled by City staff when dealing with a City-owned facility. · If it is the intent of the City to shift the risk of operating the concession to a private party, and generate an established level of retained earnings from the concession operation, the City will need to provide any service provider with a guaranteed margin of operating profit and, in exchange, receive a guaranteed minimal base of financial return consistent with facility financial Perfonnas. , , / ) \ J , J · The YMCA has indicated that their decision to expand the aquatics center was based on the assumption they would be entitled to share in the revenues generated by the concession. (see attachment) o Please note that the YMCA construction cost allocations now include "bricks and mortar" expense for the concession space and a proportionate share of the concession equipment due to the YMCA expansion of the aquatics center. o In addition, the YMCA will also be paying for direct access for aquatics users, which includes a seating area that exclusively serves aquatics members. o With respect to private leasing, and the "assumption" that the YMCA would be sharing in the revenues, the YMCA would have to give their consent on how any retained earnings would be directed. City staff has not had any direct negotiations with the YMCA on this issue, but had understood that the YMCA would be seeking some type of revenue sharing arrangement. · The Finance Director is working on preparing an updated financial analysis that includes the expanded aquatics space by the YMCA. This analysis will be available at the meeting, but according to Jim Dickinson, will be difficult to calculate with any great degree of precision due to the uncertainty of customer counts, operating hours, and food category sales. More information will be needed. · As noted previously by City staff, concession sales were designated as a revenue stream to help support facility operations. Diverting any portion of the retained earnings to the capital campaign will consequently result in reduced operating revenues for operations and potentially increase public subsidization of the community center. · From a campaign timing perspective, as the concession will be in operation only after the conclusion of the capital campaign, and theoretically any possible proceeds will be generated only afterwards, how will these dollars be counted towards the campaign goal in today's context. Similarly, given the nature of revenues generated from the concession and the need to update equipment in the concession after a certain period of time, where would the money come from if retained earnings are diverted to the campaign. In addition, how long would this type of campaign arrangement last? These talking points and questions are respectfully submitted for Council consideration. Given the importance of addressing other key project issues this evening, the subject of concession leasing could be addressed at a later time, after City staff and the YMCA have had some additional time to research these issues. ACTION REQUIRED For Council consideration. Bill Hawkins, City Attorney YMCA of Metropolitan Minneapolis 30 South Ninth Street Minneapolis, MN 55402 ,1;12-371-8700 "j:( 612-371-8716 Harold Mezile,jr. President & CEO \ .... .1 '- -.I ~ AFFIR.\IATIVE . ACTION ~"':;c, EMPLOYER \~ YMCA We build strong kid" strong families, strong communities. December 24,2003 ~ ~ ("" I? ~ ',T'., :.:.... I,. ~ l~ '0..' ,~ L '. ,'. ,.:' I i ~- \:.' -~------ ". ., ~',,' , ! IIU' nEC 2 c r,-j'J : : ')1 : L, I Ut _, L:.i~" ' ~.' L__~_..~ -~._j CITY OF Aiwu. ..r\ Mr. John Erar City of Andover 1685 Crosstown Blvd N.W. Andover, MN 55304 Dear John: As per your request regarding the position of the YMCA stance on the concessions at the AndoverlYMCA Community Center, I offer the following: 1. The YMCA proposed to expand the aquatic area and allow our members access to the concession area based upon the city and the YMCA sharing in the concession revenue. We have been working on the assumption that this would based on the cost and usage of the facility. 2. In addition, we have also agreed not to compete by constructing our own concession stand. We felt during the discussions that a separate concession stand in the YMCA would hurt both the Community Center and the YMCA. 3. These issues were to be negotiated between Tom LaSalle and yourself. Tom also made these comments and issues public during a City Council meeting earlier. John, we are not experts in this area but our board has members available who can assist in the direction of managing the concessions including Maureen Bausch, Vice President of Business Development for the Mall of America and Matt Majka, Senior Vice President, Business Operations for the Minnesota Wild. We believe that all alternatives should be explored in the methods of operating the concessions including self operating, leasing, and others before a decision is made. I hope this letter assists you in this matter. \\~,C 'io . 9-- -?d -- \' et >t?'" '" ..-- -- \ '>' G---- t'.v'" ~ :::S-fL Sincerely, !.~~1!f!~ C)1u President & CEO -' ? c.-v' j-