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1971/02/15?] - 94 Convention Center~ Garden Grove Room~ Anaheim, California - COUNCIL MINUTES - Feb- ruary 15~ 1971~ 7:30 P.M. The City Council of the City of Anaheim met in Adjourned Regular Session with the Cormnunity Center Authority and the Anaheim Union High School District Board of Trustees. PRESENT: ABSENT: P RE SENT: COUNCILMEN: Roth, Stephenson, Pebley, Thom and Dutton COUNCILMEN: None COMMUNITY CENTER AUTHORITY: Warren Ashleigh, President, Ben Shroeder, William Currier, Laurence Henderson and Robert Hostetter. ANAHEIM UNION HIGH SCHOOL DISTRICT BOARD OF TRUSTEES: Robert Bark, President, Dean H. Pritchett, M.D., John Barton, Edward M. Hartnell, James P. Bonnell, and Kenneth Wines, Superintendent of Schools. CITY MANAGER: Keith A. Murdoch CITY ATTORNEY: Joseph B. Geisler ASSISTANT CITY ATTORN~EY: Alan Watts DEPUTY CITY CLERK: Alona M. Farrens DIRECTOR OF PUBLIC WORKS: Thornton Piersall STADIUM AND CONVENTION CENTER DIRECTOR: Thomas Liegler ASSISTANT CITY ENGINEER: Ralph Pease OPERATIONS MANAGER, CONVENTION CENTER: Ed Stotereau EXECUTIVE VICE-PRESIDENT,ANAHEIM VISITOR AND CONVENTION BUREAU: William F. Snyder Mayor Dutton, President Ashleigh and President Bark called their re- spective meetings to order. ANA~L£1M CON-~ENTION CENTER BETTERMENT PROGRAM: City Mmnager Keith Murdoch advised that for the past year and half it has been apparent the Convention Center as it presently exists is not adequate to take care of the demands placed upon it. He added that the original primary purpose of the Convention Center was to enable the City of Anaheim to attract conventions and convention busi- ness into the City, at which it has been so successful that it is becoming increasingly difficult to be able to schedule different types of entertain- ment in these facilities as was originally planned. Mr. Murdoch advised that information pertaining to the problem has been gathered over the past year,and it is felt a possible solution has been found and this joint meeting is being held to present a Convention Center Bet- terment Program to the three bodies involved in its operation. Thomas F. Liegler, Director of the Stadium and Convention Center, briefed the attendees on the history of the Convention Center, stating that hotel and restaurant industry representatives in 1962 had requested suCh a facility in order to attempt to bring tourist trade into the City during other than the summer months and Christmas and Easter vacation period, and they in turn would present to the City a 5% room occupancy tax to be paid by the vis- tors. Mr. Liegler distributed a fact sheet of excerpts from the Stanford Research Institute Report on the original Convention Center concept, size and layout. He called attention to the fact that S.R.I. had predicted 263 event days for the Convention Center after the third, or first normal year of operation; whereas there actually were 569 such event days in 1970. He further advised that the national average for such facilities is 210 event days per year. He stated that the present Convention Center was constructed some- what larger than Stanford Research Institute had recommended; yet, after only three years of operation it is now incapable of serving the entire community properly for the following reasons: 1. The Visitor and Convention Bureau has been extremely active and efficient and has done an excellent job in booking conventions. 2. The Convention Center staff's service has resulted in many re- peat customers. 71-95 Convention Center, Garden Grove Room, Anaheim~ California - COUNCIL MINUTES February 15, 1971~ 7:30 P.M. 3. The convention season now is a year-around business rather than only six months, leaving less and less facilities available for other events. Mr. Liegler stated one of the major concerns is the probable loss of the ability to present to the community events other than conventions, such as the automobile show, circus, home show, Carrousel of Anaheim, con- certs, athletic events, etc. William F. Snyder, Executive Vice-President of the Visitor and Convention Bureau, presented the following information with the aid of slides: 1. Convention statistics for the Convention Center, showing an increase in attendance from approximately 45,000 in 1966, to 181,000 in 1970. He advised that the estimated financial impact from the Convention Center has risen from about $6,750,000.00 a year in 1966, to about $29,000,000.00 in 1970. 2. A listing of conventions and resulting expected attendance already booked for Anaheim from February, 1971 through 1982, broken down in- to total conventions generated by the Convention Center, noting that without the Convention Center Anaheim would have had 65,000 expected convention dele- gates rather than 224,020 from February through December, 1971. 3. The dollar impact of the already-booked Anaheim conventions from February, 1971 through 1982, also broken down into total business and that business created by the Convention Center. He advised that the national average indicates each delegate spends approximately $160.00 during a con- vention stay. 4. Number of future conventions booked each during 1970. 5. Room occupancy tax receipts for fiscal years 1966-67 through 1969-70, and a monthly comparison of these receipts July through December, 1969 and 1970. Mr. Snyder stated that the existing limited Convention Center fa- cilities preclude handling extremely large and lucrative conventions, and also prohibits flexibility in that it is now necessary to allow two or three days to set up a convention prior to the actual event and the same time for a convention to move out, and thus that much time is lost. However, he ad- vised if the Convention Center was expanded, it would be possible for a se- cond convention to move in while one was in process. He presented slides showing events already scheduled for various months in 1972 and pointed out how conventions and local events overlap, causing problems. He added that if the Convention Center was expanded, it also would be possible to schedule conventions during Christmas vacation, since there now are enough hotel and motel accommodations available to handle all of the resulting visitors. Mr. Liegler advised that over the past year their study had included the existing situation and needs, and also the competition (Los Angeles, Long Beach, Las Vegas, Tucson, Phoenix, etc.) who are building new facilities. With the aid of a graphic display of the existing facility and a structural model of a proposed expanded facility, Mr. Liegler pointed out other properties in the area of the Convention Center and advised that the Jolly Roger Inn, northeast of the Convention Center, plans an addition to its facilities. The Royal Inns Motel will be constructed to the east, and Quality Courts Motel to the southeast; also, it is anticipated a hotel, pos- sibly a Sheraton Hotel, will be constructed to the south. Therefore, the proposed Convention Center expansion of approximately 100,000-square feet of exhibition space would adjoin the existing facility to the south, next to the anticipated Sheraton Hotel. This additional exhibition hall would allow for acco~odation of larger conventions, since it would be possible to open up a divider between the present and new halls, and also would pro- vide the flexibility to allow two simultaneous events. Also, by moving events into the new exhibition facility, the arena would be freed for com- munity activities. The proposed expansion plans also included additional offices. 71-96 Convention Center, Garden Grove Room, Anaheim, California - COUNCIL MINUTES - Feb- ruary 15, 1971, 7:30 P.M. With regard to needed additional parking space, Mr. Liegler advised that it was believed the best solution would be purchase land available south of the Convention Center property; if at a later date additional parking was necessary, a parking structure could be built, although it is not anticipated this would be necessary in the immediate future. Mr. Liegler advised that the total cost of the proposed expansion, including construction of a parking structure, would be approximately eight million dollars; however, this amount would be considerably less if, as sug- gested, the additional land was purchased and improved for parking purposes, rather than building a parking structure. He distributed a breakdown sheet on the estimated cost. TIME SCHEDULE: Mr. Liegler advised that if approval was given immediately to expand the Convention Center facilities, and there were no interruptions in the work, it would be the latter part of 1972 or, more probable, some time in 1973 before the work was completed. FINANCES: Mr. Liegler recalled that under the present lease contract, the Con- vention Center Authority must receive $930,000.00 per year from its parents, the Anaheim Union High School District Board of Trustees paying 1/930th, and the City of Anaheim paying the balance. If the proposed expansion is approved at eight million dollars, there would be an additional lease payment due from the City of Anaheim, starting at $480,000.00 and escalating to approximately $700,000. over the period of the agreement, which runs to 1996. ROOM OCCUPANCY TAX: Mr. Snyder presented a slide showing the 5% room occupancy tax revenues received during fiscal year 1969-70 and the estimated receipts through fiscal year 1972-73, which income alone would, starting with fiscal year 1971-72, be sufficient to cover the total larger lease payment due under the proposed expanded Convention Center. In addition, there would be opera- tional income. Mr. Liegler presented a chart of payments due through 1996 under the existing lease, compared to the necessary lease payments if the proposed expan- sion is approved. Mr. Murdoch explained that, since the room occupancy tax is actually a business license tax, those revenues go into the General Fund; however, at the time of structuring, included in that Resolution was that first call on the funds would be for the amortization and operation,if necessary, of the Con- vention Center. Councilman Pebley suggested that by raising the room occupancy tax rate to 6%, Anaheim's rate still would be under that of most cities with con- vention centers. Mr. Liegler agreed, but added that the figures used in the presenta- tion this evening were based on the existing 5% rate. Councilman Dutton explained that, although the hotel and motel people previously had indicated a willingness to increase the rate to 6%, the City Council had been reluctant to do so because the Los Angeles rate was not 6%; however, since that time, Los Angeles has increased their tax to 6%. Council discussion revealed that most cities have a 6% rate, although San Franciso's rate is 8%. Mr. M~rdoch advised that an additional 1% room occupancy tax could result in revenues of approximately $1,740,000.00 in 1971-72, and $1,920,000.00 in 1972-73. Mr. Schroeder asked what events the Convention Center as it exists would not be able to handle in the future that have been held there in the past, if the facility is not expanded. 71-97 Convention Center, Garden Grove Room, Anaheim, California - COUNCIL MINUTES - February 15, 1971, 7:30 P.M. Mr. Murdoch advised that in the past it has been possible in many cases for activities to shift their dates to meet the schedule of the Conven- tion Center, and for events such as the Home Show and Boat Show, where the dates could not be shifted it has been possible to schedule them in between convention dates. He stated that George Colouris, in particular, has been ex- tremely acco~nodating in shifting dates to meet the Convention Center schedule. He further stated that the Anaheim activities promoted by Mr. Colouris and Werner Buck alone have resulted in bringing more direct revenue into Anaheim than all of the baseball games at the Stadium. Mr. Murdoch further explained difficulties encountered in scheduling the Carrousel of Anaheim and High School Graduation activities; also, the popu- lar basketball tournaments sponsored by the Lions Club over the 1970 Christmas holiday season is going to be extremely difficult to schedule again for 1971 because of previous bookings. Mr. Barton asked what amount of increased local events could be ac- commodated by the proposed expansion. Mr. Murdoch advised that there is quite a heavy demand for local events; however, since the first year of operation it has been impossible to accormmodate most of the requests for local and con~nunity events, although they have always attempted to accommodate such events as the Carrousel and Music Festival. Also, in answer to Mr. Schroeder, Mr. Murdoch advised that the proposed additional exhibition and meeting room space would create a higher degree of flexibility in moving conventions in and out, thus freeing the arena and other meeting rooms for other events. Mr. Bark asked what the result would be should the room occupancy tax revenues be lost through some court action - would the operational reve- nues be sufficient to handle the additional lease payments? Mr. Murdoch advised that operational revenues would not cover the. cost of amortization; however, the room occupancy tax procedure is used quite commonly and has been made available to general law cities by State Legisla- ture. In reply to Mr. Hartnell, Mr. Murdoch advised that there is no al- ternate plan for amortizing the Convention Center other than the room occu- pancy tax and operational revenue. Replying to Mr. Bonnell, Mr. Murdoch advised that there presently is no court action in process that might jeopardize the room occupancy tax; that the last such court action took place in San Diego several years ago, and was defeated. Mr. Bonnell asked what the return on investment would be on the pro- posed eight million dollar expansion; how many years of the ROI; what the re- sultant increase in profits would be from two exhibition halls rather than the present one hall; and how long it would take to pay off the Convention Center if operating revenue had to be used for that purpose. Mr. Snyder answered that these projections had not been made and could not be made until the resulting double bookings could be practiced for a year or two. He added that at present there are three bookings being dis- cussed for 1975 that could not be accepted unless there are additional facili- ties available; als0, two groups already booked for 1975 could be operating side-by-side with the projected additional facilities. PROJECTIONS: Mr. Bonnell asked how much bookings increased per year on a na- tional average, and also what the increased revenue would be from the proposed Anaheim Convention Center expansion. 71-98 Convention Center, Garden Grove Room, Anaheim, California - COUNCIL MINUTES - Feb- ruar¥ 15, 1971, 7:30 P.M. Mr. Mnrdoch reiterated that the additional revenues have not yet been projected; however, it would be possible to predict these on an approximate basis. He added that the wholesome attraction of Disneyland and the Anaheim community has resulted in a greater increase per year for conventions in Ana- heim than the national average. In reply to Mr. Bonnell, Mr. Murdoch stated that Orlando, Florida, probably would have a similar situation because of the proposed Disney opera- tion there; however, the differences in climate made Anaheim a more desirable location. Mr. Murdoch further advised that in order to make the requested re- sultant revenue and booking increase projections, it would be necessary to es- timate what the mix would be with regard to conventions and trade shows; how- ever, he would not hesitate at this time to predict a 33% increase in conven- tions that would be booked as a result of the additional facilities that would be available. Mr. Snyder advised that,based on a 33% increase in conventions booked, resultant spending by delegates should increase by about $11,000,000.00 per year. Councilman Pebley noted the expansion activities of area hotels as a result of increased business generated by the Convention Center, which ex- pansion also results in additional funds for all of the Anaheim tax authori- ties, thus taking some of the tax burden off the taxpayers. Mr. Mnrdoch agreed with Councilman Pebley's statement, and further advised that, although there has been no publicity on the proposed Convention Center expansion, there has been a sizable increase in announcements of pro- posed additional hotel facilities over the past few months. Mr. Schroeder asked if the bonds for the proposed eight million dol- lar expansion are projected to be paid off by 1996 solely through income from rental of the property which has to be underwritten by the bed tax. Mr. Mmrdoch agreed that such an approach has been suggested since this appeared to be in line with the original thinking for the present facil- ity. He further stated that the existing facility has not cost the Anaheim individual taxpayers any money; rather, it has generated increased commercial assessed valuation and additional money brought into the City. REQUESTED STUDY: Mr. Schroeder asked if a study had been made as to what portion of the money spent by convention delegates actually went to taxing agencies. Mr. Mnrdoch advised that, although such a study has not been made, it could be done by using the existing I.A.C.B. studies as a base. He fur- ther advised that Anaheim had participated in an I.A.C.B. Study four or five years ago which revealed that delegate spending was higher in Anaheim than the national average. ASSESSED VALUATION COM]PARISON: Mr. Bark suggested a comparison of the asses- sed valuations prior to Disneyland and as they exist today could show how the local tax authorities have benefited by Convention Center activities. Mr. Murdoch agreed,and advised that after the first eleven months of operation of the Convention Center an impact study was made and showed that a good portion of the activity was generated by the presence of Disney- land. He further advised that it now probably would be possible to conduct a study to determine how the Convention Center has affected Disneyland atten- dance, plus other factors. 71-99 Convention Center, Garden Grove Room, Anaheim, California - COUNCIL MINUTES - February 15, 1971, 7:30 P.M. Mr. Schroeder asked if it would be possible to apply controls to an expanded facility to thus assUre more frequent use of the building for local community events. Mr. Murdoch agreed such controls would be possible and a modi- fication of the present policy probably would be necessary; however, he cautioned against controls that would be too rigid since it would be ne- cessary to set most convention dates three or four years in advance. Mr. Bark asked what the minimum amount of lead time would be that would be required if a local organization reserved a date for a year from now and then found they could not use it - if the Convention Center was notified of this six months prior to the scheduled date, would it be possible for the Convention Center to schedule another activity? Mr. Murdoch advised that since conventions are booked about three years in advance, it probably would not be possible to use the released facilities with a notice of cancellation only six months in advance. In reply to Mr. Barton's query on whether the proposed expan- sion would open up meeting rooms to greater use by local organizations, Mr. Murdoch advised this would be one result. Mr. Snyder stated that conventions presently being booked are for 1974 through 1978, and thus cancelling reserved space even a year in advance would make it impossible to use that space for a convention. How- ever, the projected Convention Center expansion was designed to allow more meeting room space by converting areas into different sized meeting rooms, thus leaving exhibition halls free for convention use. Mr. Liegler advised that, in addition to conventions, "other events" such as automobile shows or boat shows where an admission is char- ged generally are scheduled into the Arena and/or Exhibition Hall, and "local events" are requests for meeting rooms, which requests have been getting more frequent all the time and it has not been possible to accom- modate them. It is hoped the proposed expansion would allow the schedul- ing of more such "local events." REVENUE PROJECTIONS: Mr. Barton suggested that any revenue projections for such an expanded facility necessarily would have to include local events. Mr. Liegler explained that during fiscal year 1969-70 revenues from leasing the Arena and Exhibition Hall amounted to $400,000.00; how- ever, unless the facilities were expanded it would not be possible to con- tinue to schedule some activities. He cited as an example the Boat Show, which has been held at the Convention Center for three years, and which has grown in interest and attendance each year. He added that the Boat Show was held for 17 days the first year, 10 days the second year, and 8 days this year, and unless additional space is available it will not be possible to hold the show at all in 1972. Councilman Dutton stated he was concerned because it is increas- ingly difficult to schedule the Convention Center for events that are of interest and benefit to the local cormuunity, and thus he believed an ex- pansion is necessary. ANAHEIM UNION HIGH SCHOOL DISTRICT, BOARD OF TRUSTEES, ADDITIONAL CONVEN TION CE~xgK Si'I~: Mr. Bonnell suggested the existing Convention Center could Be called Convention Center No. 1, and Convention Center No. 2 could be a site with a theatre that the Anaheim Union High School District Board of Trustees has in mind, which could be sold to the City and used for local events. Mr. Murdoch advised that this available facility would be an item of discussion at a forthcoming City Council meeting; however, it was doubt- ful it could be used for the type of activity intended for the proposed ex- panded Convention Center facility. 71-100 Convention Center, Garden Grove Room, Anaheim, California - COUNCIL MINUTES - February 15, 1971, 7:30 P.M. REVENUE PROJECTIONS: With regard to Mr. Barton's remarks on revenue projec- tions, Mr. Murdoch advised that it may be necessary to make two or three dif- ferent projections reflecting different mixes of events in order to properly depict all possibilities. He further stated that present policy is that the Visitors and Convention Bureau has the ability to book conventions for just about any dates except those reserved by the High School District or those reserved by the City Council up to one year from the date of an event. Since a year's notice is not adequate, Mr. Murdoch suggested the present policy may need to be revised. Dr. Pritchett asked if a record was kept of all requests for con- ventions and if a comparison of turn-downs also was available year-by-year. Mr. Murdoch advised there was such a record on inquiries and that within the past few months a practice of keeping a record of turn-downs was instituted. Mr. Snyder advised that the peculiarity of conventions necessita- ted soliciting such business, thus there is not much of a log on requests. In reply to Reporter Jack Boettner of the Los Angeles Times, Mr. Murdoch advised that the property south of the Convention Center, proposed for parking, consisted of about 20 acres; however, the total acreage avail- able is about 30. Mr. Murdoch advised that the requested projections would be submit- ted in written form to the three organizations represented tonight. SUMMARY: Mr. Ashleigh expressed appreciation to the Staff members for their presentations, and advised that the Coum~unity Center Authority's position is that justification is necessary for all of the improvements proposed. How- ever, he added, the Coummnity Oenter Authority in essence is in favor of the general proposal and feels it would be a sound and good move. He added that the Coum~unity Center Authority is requesting direction from the City Council and Anaheim Union High School District Board of Trustees. Mr. Bark stated the Anaheim Union High School District Board of Trustees could make no cor~nent since they have not had a recommendation or proposal submitted to them. Mr. Murdoch advised that the purpose of this meeting was to acquaint those present with what the apparent needs are with regard to the Convention Center and to present a proposed approach for meeting those needs. He sug- gested it now might be appropriate for the City Council and Anaheim Union High School District Board of Trustees to indicate whether they want the Staff to go ahead with a. spectfic proposal for the various bodies to act upon. In reply to Councilman Pebley, Mr. DDardoch stated that presently the Anaheim Union High School District guarantees 1/930th of the total lease payment whether the payment stays as it is or is increased by virtue of the proposed expansion. City Attorney Joseph Geisler advised that the bond counsellors had indicated they would prefer to have the Anaheim Union High School District Board of Trustees' guarantee increased by a nominal amount in the event the proposed expansion is carried out; however, they had not indicated a specific amount. He added that it was his opinion this suggested increase would be about $100.00 or $200.00 a year. Mr. Bark asked if the Board of Trustees was a joint power in the entire Co~mm~nity Center Authority transaction, regardless of the amount of their lease payment. Mr. D~rdoch advised that, although the Board of Trustees and the City Council are the two joint powers of the Co~nunity Center Authority, the rights and obligations of the two bodies are substantially different, as spelled out in the document2 71-101 Convention Center, Garden Grove Room, A~aheim, California - COUNCIL MINbi~S February 15, 1971. 7:30 P,M. Mr. Geisler advised that the Board of Trustees is one of the two joint powers that formed the Comm~anity Center Authority; however, the Com- munity Center Authority is a separate'legal entity with limited powers of its own. The City of Anaheim, as a member of the Co~unity Center Author- ity, guarantees the debts of the Co~nity Center Authority'under the agree- ment; also, the City of A~aheim leases the Convention Center from the Com- munity Center Authority and o~erates it as a City function, assuming respon- sibility for all maintenance and upkeep. Dr. Pritchett suggested the joint powers hold a meeting to dis- cuss the proposed expansion as a co~m~on body, at which time the necessary facts and figures should be available to allow for a possible decision at that time. DRAFT OF PROPOSAL: Mr. Mnrdoch advised that prior to such a meeting a draft of a proposal could be presented to the two bodies for consideration. MOTION: Councilman Thom offered a Motion that the Staff be instructed to pursue and develop a proposal for expansion of the Convention Center. Coun- cilman Pebley seconded the motion. MDTION CARRIED. The Anaheim Union High School District Board of Trustees took si- milar action. Mr. Ashleigh advised such instructions to Staff also were reques- ted by the Comm~unity Center Authority. ADJOURNMENT: Councilman Thom moved to adjourn to 9:00 A.M., Tuesday, February 16, 1971, for an Executive Session on a personnel matter, as requested by the City Manager. Councilman Pebley seconded the motion. MOTION CARRIED. Adjourned: 9:45 P.M. SIGNED Deputy City Clerk