Travis County Commssioners Court
August 12, 2003
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Item 16
16. Discuss and take appropriate action on exposition center fee increases. Could you all just actually move to one side. Sit right there and make yourself at home.
>> good afternoon, I'm alicia perez, executive manager for operations, as we consider budget issues, the court has considered fees of various types. We would also like for you to consider some fee increases or changes at the exposition center. I'm going to go ahead and turn it over to -- to the director. And judge scott Davis. To go ahead and go over some of the changes. You have backup, also, in your notebook that -- that specifically outlines what the changes that we are recommending. And these are for fees that -- at the exposition center.
>> thank y'all. If you'll look at the materials that were handed to you, it has the return and proposed rates and a little explanation to go along with them. We are proposing that we increase the rate for the leudke arena by a thousand dollars. Increase the maximum for a ticketed event to $8,000. The director be given some discretion as to what -- what might be an appropriate charge for a particular event. We are having a pet-a-paloosa. All they want is a clean floor, a clean floor. A clean arena, a clean floor. Not a lot of costs on our part other than utilities. Other events a motorcross next month, going to require dirt, be mounded for jumps for the motorcycles, tracks being built within the dirt. A lot more effort than just the clean floor. So I would think that the rate, the pet dallas a-palooza folks would be charged would be less than the others would be charged. There's also local event versus national events, I would hope that we would want to nurture and assist local talent, so to speak, getting started and that -- that they be given not necessarily a break, but maybe more comfortable opposed to a large event coming in and we are one stop of many. If -- if you look at the show barn, we give folks when they rent the facility 53 -- 50 free stalls. To believe difference is we will cut out the free stalls, they will have to pay for those. And a little bit further, I believe we increased the stall price from $10 to $2.
>> [indiscernible]
>> thank you. I'm reaching for my glasses. Not -- not good getting old. Skyline club would be $150 increase per day. The banquet hall actually goes down and the rental rate, but there's some cost that's we want to capture that I don't think we have been capturing in the past, once again I will use the example of a clean floor. If you rent the banquet hall, all that you want is the building itself, no tables and chairs, then you would pay less. But the cost for us comes in, we have to set up for an event. We have to bring in the tables, we have to bring in the chair, set them up, then take them down. That cost would be -- would be incurred by the people that were using them. So we are asking that the tables and chairs, you know, would be in addition to the rent. On top of everything, we wanted to add a cleaning fee. Flatten%. The rental rate if it's 1800, keep it 1800 so my math won't get out of control. It would be $180 cleaning fee, in addition to the 1800 in rent. Once again to try to recapture some of our expenses. On the main arena, we want to -- to have a utility fee, the cost of trying to recover the heating and air conditioning, that would be $100 per hour. That's pretty much the -- the -- the increases.
>> scott, do we know what it costs us per hour to operate the -- [indiscernible]
>> yes.
>>
>> [one moment please for change in captioners]
>> .
>> ... Of what it really takes to open this door. I mean that is really what -- and that could be done. You know, I mean Austin energy, we have all sorts of folks, roger might even be able to go out and do that. But that is -- now, if you are asking for $100 an hour for hvac, I just want to you make sure that you are covering your nut on that deal. And there is a -- there would be a simple way of finding what it takes, you know, to run that a.c. Unit.
>> and we have that.
>> and is the $100, I mean based on the number of events that you are talking about, does that cover it?
>> I think it's covered. What we did is we did the analysis, Commissioner, and went through last year what we had paid for the operating the air conditioning system. And we had, you know, lots of spread sheets, you know, to come up with this number. The number is really between like 85 to 90, but we rounded off to 100, you know, a comfortable level and easy to work with. The only time might hit us on that if we have reached the demand value of the air conditioning system. If we operate the air conditioning system to its capacity, which is 630-kilowatt per hour, well, that will happen on rare cases, you know. Probably twice it happened before when we had the r.o.t., When they have large -- so many people inside the facility, the two chillers work at the same time and the [inaudible]. That's the only time, you know, we have reached a demand higher than our normal. So we are comfortable right now with $100 per hour.
>> I know before, I think [inaudible] as far as rated none and you didn't have any quoted amount there because -- but with this new proposal, $100 an hour, before I remember I had asked some time ago how and what will the rate be as far as the usage of the hvac out there. And of course at that time that I asked that questions, we didn't have enough experience to really determine what that rate would be. But, of course, now with the number of events that we have had out there and are currently having, I'm assuming that we have enough experience to submit this $100 an hour per -- with these particular events that are going on. So by saying that, is that basically then accuracy of -- or pretty accurate as far as the experience that we have had over the number of events that we've had in the past out there?
>> yeah, for the experience that we have. I want to remind the court because we'll see it on our own utility bills the increase in the surcharge for fuel that the city of Austin -- that has not been taken into account. And so we will see that within the next six months to a year what impact that will have.
>> how do we or do we not recapture this electric per hour charge related to two of our biggest customers who have separate contracts with us that are multi, multi, multi-year, and I'm speaking of the rodeo and I'm speaking of the ice bats. Because those original contracts were signed before air conditioning existed. What do we have built in to the rental rate or not anticipating that we would have air conditioning at some point [inaudible] are going to be consumers of the air conditioning.
>> the rodeo's leagues actually calls for them to pay -- we read the meter before and after and they pay.
>> that one is covered.
>> the ice bats, no.
>> they are not covered, but remember their lease is good through '04 being the last year. So in the next negotiation we'll certainly address that.
>> fiscal '04 for us as opposed to season '04.
>> January of '04.
>> okay.
>> we think that these increases are comparable to market for a facility such as the expo center?
>> we've contacted -- we've contacted ones in the area and like arenas. We're higher, okay? Now, I contacted the palmer events center, and I was -- you know, my main concern is the reason, this one generates the most income, it's also the one that generates the most expense because you turn on the air conditioning system. So I called the palmer event center, I want to put on a concert, they can hold 6,000, we can hold 9,000. What's it going to cost? By the time the guy was through, it's $18,000 to $20,000 is what it costs to rent the palmer events center for a concert for 6,000 people. They don't have any concerts there. They don't have any concerts there because it's too expensive.
>> and it will also cost you $7 to park in the parking garage attached to it.
>> yes, ma'am. It's crazy. So i'd say we're a little higher than, like, waco. We're a little higher than bellton. We're a smidge higher than the san antonio coliseum, but i've never had anybody tell me that our rates were too high. In fact, when I talk to people about rates, they automatically go to the maximum, which is 7500. They automatically go to the maximum which is 8,000, 7500 which will be 8,000, because they know that hopefully they are going to have the ticketed event that's going to bring in that many people so they are just prepared to pay the maximum. The only -- you know, for a quintinara or a sweet 16 the banquet hall is not cheap, but it's cheaper than going to the crockett center. I think we're comparable with the stuff no town and larger cities. Not smaller cities, but we're a large city now, capital of the state. If that answers the question.
>> scott, what did you tell me that your utility bill was? What were you -- what is your monthly --
>> for the year it's going to be approximately $300,000. So 25,000 a month, is that -- yeah, that's right.
>> so you are telling me that your electric -- and I would assume that the majority of your electric bill is your hvac. Would I be incorrect in assuming that?
>> no, no.
>> so I would be fairly accurate? So if you are telling me your utility bill is 300 grand a year and you are telling me that you are banking on $100 an hour, how many hours do you think you are -- I mean what is the average hourly --
>> well, I did a little of this. In order to -- I believe we're going to generate another $12,000 in income with the utility increase. That's an additional 120 hours of use. That's about 20 events more in the main arena than what we v see, the key to all of this -- we have contracts that we've already entered into where these rates will not be applicable. Okay. So the effect of this increase will be felt this year, but not fully. Next year is when we would have a -- the full effect of these rate increases. You can't -- you know, the hvac system uses natural gas and electricity. Electricity runs the air handlers, natural gas runs the chillers. So a lot of times we're at the whim of the utility companies. We have a tremendous gas bill in was it February or January? Very high. But the gas rates, I think, either doubled or tripled. Right now we're not charging anything for utilities. So with the utility fee and an increase in rent, we should better cover our expenses. You all had a discussion earlier this budget year with the parks, and they came in, wanted to increase their fee. And their goal, I believe, was to get to 75% of their operational costs covered through their fees. Well, you know, we're supposed to do 100% of our costs covered through our fees. And even with the bad economy and even with the war, we're going to have -- the last 10-year period we're going to have the second best period that we've ever had. And next year it should be even -- our revenues should be even higher.
>> and even with that, we will not cover all the expenses for this year. We hope to be able to cover them for next year.
>> what is the percentage? I mean how -- I mean where are we? Is it better than where we were last year or five years ago? Or have we narrowed the gap, widened the gap?
>> it's the second best year on this one.
>> I'm not getting to the part about the subsidy related to, that's why we're looking [inaudible].
>> because we thought you would ask that question, we went ahead and made a chart for you, and what we did is show you what the revenue has been, and that's your blue, aqua marine color bar. The other is the purplish one is the ice bats. So this shows you that despite the decrease in revenue from the ice bats, we have indeed increased our overall revenue, which means we've gotten more non-contractual, I guess, long-term contracts events in. So we have increased our revenue despite the down economy and despite the ice bats having -- continued to -- their revenues continuing to go down.
>> my next question is that's on the revenue side, but where are we on the expenditure side and what is the gap?
>> the gap for the expenditure side, I think we're still working through it, but of course the biggest, you know, piece of that is the utilities. So we're looking at perhaps -- and I still have to work through some of these issues, but between maybe about 100 and 60,000 or so. And that's to provide us at least a 50,000 ending fund balance for our insurance. Now, if we look at even more than that, then of course, you know, it could go up to the 300,000 if we take all the utilities. And that is something I think we are still working on on the possibilities.
>> and that's starting the year out with no money.
>> [inaudible] do you have any -- I'm still just trying to get a scent of is the gap between revenues and expenditures narrowing, expanding or staying the same? I'm trying to get a sense.
>> well, I think for next year, given the third revenue estimate as it stands currently, what's in the black book, and you will see this, in the preliminary budget there is a gap of 200 and I believe it's $22,000. 22,355 that would be required in additional revenue or less expenditures for the -- for this fund to be balanced against the county auditor's third revenue estimate currently.
>> and that's the third revenue estimate and we have provided additional information.
>> what is the third revenue estimate?
>> it is $826,000, sir.
>> 826,000?
>> that's correct.
>> and is that $200,000 something, gentlemen's characters is that -- jessica, is that with the transfer from the general fund of 200,000?
>> there is no transfer -- what you are referring to, Commissioner, is last year I believe alicia came forward to the court with an understanding that she wanted to manage her utilities account together, and so that would be general fund and expo center. It is my understanding from the department that this year currently the facilities management, and please correct me if I am wrong, but the facilities management general fund utilities budget is currently picking up the expo center's utilities because there is a shortage of revenue in f.y. 2003. But there isn't a budgeted transfer, per se.
>> not a transfer, but moneys coming into the expo center here.
>> what we have done is been paying from the utilities and reconcile right about this time. And to see -- because we had had a lower estimate in terms of revenues, and we had increased that and had more revenue come in in the latter part of this fiscal year. For next year, I think what you have in the black book, we have changed that to go up to 950? 950,000 in projected revenue.
>> so what I'm trying to get to though is the 230,000 that's the differential. It would be greater than that if the utilities were not being picked up by the facility?
>> this assumes in '04 the utilities would be picked up out of expo center just like we assumed in f.y. 2003.
>> to get the additional revenue certified, the additional 115,000, we would still expect the expo center, assuming our expenditure projections are correct, we would still be short $115,000.
>> krobgsly 100,000 -- approximately 100,000. 107,000, somewhere around there.
>> so this year the total expenditures was in the million dollar range?
>> what was budgeted was a million dollars -- excuse me. Let me see if I have --
>> 1.1 million.
>> 1.89, sorry.
>> so I think we are narrowing the gap considering what we used to have to plug in.
>> well, the 1.1 is some of what a misnomer in that that was never money that was allocated. That was money that might be spent based on revenues. And so we're not spending anywhere near that much money because we don't have it.
>> right. I had mentioned last week when we were talking about ideas we would bring forward during this next budget season is that in addition to what we need to do today or whenever we do act on this is that we need to talk about some more long-term strategies out at the expo center in terms of related to either marketing and other kind of positioning for the future in terms of a facility before that was kind of haphazard in terms of how we use it, and I think now with the air conditioning it truly can be and should be a year-round facility so we can help recapture more of these dollars. Had a tremendous concern and still do about some of these i'll call them super events that just put an unusual strain on the facility simply because of the attendance and whether there is some strategies that we really want to talk about there. I'll throw another one out there. I think we are coming near the end, we've still got another year, of our current concessions contract. And when you go through a competitive process for that, I think now we have a much more attractive facility out there and that we could have greater competition for that contract and in terms of the percentage that winds up coming to Travis County based on what others out of the market are getting. I mean we've kind of -- very difficult to attract attention before because it was the rodeo and the rodeo. Now there are others that may be interested and that competition could create new financial opportunities for the county in terms of more dollars coming our way in terms of a percentage if whomever is going to be the ultimate winner of that r.f.p.
>> alicia and scott, do you feel these particular fees that you have laid out to us in item 16, do you feel that that is about as close as we can get at this time to okay date, and also the knowledge of persons dealing the increase of the new charge, I guess, as far as help paying for the hvac system. That's something, the notification process and letting folks know where we're coming from to end up narrowing the gap as much as possible and then [inaudible], things of that nature. Do you feel pretty comfortable with that at this point? Because I would like to move approval of item 16 if --
>> second.
>> I do. I feel like we're still very competitive. And the most moneys -- the large money is generated by the arena, that's where the largest increase is. But that's where the largest number of people go also. So it's much easier for them to absorb it. And that's why I lowered the rate on the banquet hall so that it wouldn't be so high if folks wanted to have the quintinara there and not price ourselves out of the market.
>> if people use our chairs but put them up, do they still pay the table and chair fee?
>> well, you know, you raise a good question. I've never --
>> the groups I have in mind, my guess is they wouldn't want to do that anyway.
>> you know, if they did it themselves, that would be one thing. There might have to be some supervision so they don't disappear, so to speak, but i've never really thought of that. If a nonprofit or somebody came in and wanted to do that, we would work with them.
>> there's a lot of work involved.
>> that's where the work is involved. Hours.
>> that's quite a bit of work.
>> we would want these fees to be effective when? September 1 or October 1?
>> October would be fine.
>> that's when we had scheduled them for was October.
>> October 1?
>> that's what we had planned.
>> let's get a report back here January 1 after three months and see if there's been some sort of catastrophic effect we'll know about it.
>> that's part of the motion then fits October 1.
>> that's friendly to the second. Any more discussion? All in favor? That passes by unanimous vote.
>> thank you very much.
>> and we will come back to the court on the utility issue in the next couple of weeks.
>> thank you, alicia, thank you, scott.
>> thank you all. Have a good day.
>> or evening.
Last Modified: Wednesday, August 13, 2003 7:52 AM