MEMORANDUM

Form revised February 22, 2006

FISCAL NOTE FOR NON-CAPITAL PROJECTS

Department:

Contact Person/Phone:

DOF Analyst/Phone:

Seattle Center

Ned Dunn/684-7212

Margaret Wetter/684-7203

Helaine Honig/684-8222

Cheryl Swab/684-8053

Legislation Title:

AN ORDINANCE relating to the Seattle Center Department; authorizing execution of Amendment No. 1 to the Agreement with The Westin Seattle for the Management of Food and Beverage Services at Marion Oliver McCaw Hall and the Exhibition Hall at Seattle Center.

· Summary of the Legislation:

This legislation authorizes an amendment to the agreement between the City of Seattle and The Westin Seattle for food and beverage services at McCaw Hall and the Exhibition Hall. The amendment revises the agreement, which was completed nine months before McCaw Hall opened, to reflect the current operations in the building. The changes include simplifying certain accounting practices, a change in the timing for The Westin to propose annual menus and prices, and a change in catering prices and fees for certain events.

· Background:

In October 2002, the City Council passed Ordinance 120946 authorizing execution of an agreement with The Westin Seattle for management of food and beverage services at McCaw Hall and the Exhibition Hall at Seattle Center. The term of the agreement was five years from the anticipated building opening in the summer of 2003, ending July 31, 2008. The agreement may be extended for an additional five-year term, if both parties agree. Under the agreement, The Westin Seattle is the exclusive provider of concession and catering services in McCaw Hall and the exclusive provider of concession services in the neighboring Exhibition Hall. Concession services include food and beverage services in the McCaw Hall café and at concession stands (“over-the-counter” sales) before and during events in the building. Catering services are for special events and private party rentals of the facilities, arranged and paid for by the event organizer. Under the agreement, The Westin pays 7.5% of gross concession and catering sales to the City for the first $1,000,000 in sales, with the percentage increasing by 1% on each additional $500,000 increment of gross sales, up to a maximum of 12.5%. The Westin made an up-front capital investment of $235,000 in food service equipment and infrastructure in McCaw Hall and pays an additional 1.5% of gross sales into a capital reserve fund for replacement of food service equipment.

In the old building (the Opera House), the former concessionaire provided day-of-event concession services for Seattle Opera and Pacific Northwest Ballet events, but for the most part the Opera and Ballet elected not to use the concessionaire to provide catering services, because the concessionaire was not able to provide the level of service they desired. As a consequence, these special events were held off-site at other locations. Part of the reason in selecting The Westin as concessionaire for McCaw Hall was to keep these special events in the building, as well as to attract new business. The catering prices first proposed by The Westin were significantly above what the Opera and Ballet were used to paying for catering at off-site locations. Because it was in the best interest of all parties to keep these events in McCaw Hall, Seattle Center and The Westin agreed that The Westin would reduce its catering fees by 15% for catering sales to the Seattle Opera, Pacific Northwest Ballet, Seattle Center, and the Seattle Center Foundation. In exchange, The Westin would not pay a percentage fee on these sales to the City. However, these gross sales would count toward the total gross sales on which The Westin’s increasing percentage fee payment to the City is calculated. The experience to date in McCaw Hall has demonstrated that this revision in catering fee structure is a benefit to all parties. The Opera and Ballet are holding the majority of their special catered events at McCaw Hall, which helps The Westin by providing enough business for The Westin to retain a core of regular employees and reduce staff turnover, and helps the City by increasing the gross food sales in the building, which increases the percentage applied to calculate The Westin’s total concession fee paid to the City.

The McCaw Hall catering and concession revenue estimate of $115,472 in the 2006 adopted budget assumes the revised fee structure outlined above, which is memorialized in this legislation. Actual catering and concession revenue under the first two full years of The Westin Agreement was $102,672 in 2004 and $166,496 in 2005, both using the revised fee structure. Seattle Center’s experience in McCaw Hall has demonstrated that this revision in fee structure is a benefit to all parties and recommends that it be made permanent.

The other changes to the agreement in this amendment are minor, technical changes in reporting and record keeping which make administration of the agreement more efficient for all of the parties.

· Please check one of the following:

____ This legislation does not have any financial implications.

__X__ This legislation has financial implications.

Appropriations: This table should reflect appropriations that are a direct result of this legislation. In the event that the project/ programs associated with this ordinance have appropriations that were, or will be, received because of previous or future legislation or budget actions, please provide details in the Notes section below.

Fund Name and Number

Department

Budget Control Level*

2006

Appropriation

2007 Anticipated Appropriation

TOTAL

*See budget book to obtain the appropriate Budget Control Level for your department.

Notes: NA

Fund Name and Number

Department

Revenue Source

2006

Revenue

2007

Revenue

TOTAL

Anticipated Revenue/Reimbursement: Resulting From This Legislation: This table should reflect revenues/reimbursements that are a direct result of this legislation. In the event that the issues/projects associated with this ordinance/resolution have revenues or reimbursements that were, or will be, received because of previous or future legislation or budget actions, please provide details in the Notes section below the table.

Notes: This amendment does not result in a change to the Seattle Center revenue budget. The impact of the proposed legislation was already anticipated in the catering/concession revenue projections for McCaw Hall.

Total Regular Positions Created Or Abrogated Through This Legislation, Including FTE Impact: This table should only reflect the actual number of positions created by this legislation In the event that positions have been, or will be, created as a result of previous or future legislation or budget actions, please provide details in the Notes section below the table.

Position Title and Department*

Fund Name

Fund Number

Part-Time/ Full Time

2006

Positions

2006 FTE

2007 Positions**

2007 FTE**

TOTAL

* List each position separately

** 2007 positions and FTE are total 2007 position changes resulting from this legislation, not incremental changes. Therefore, under 2007, please be sure to include any continuing positions from 2006

Notes: None

· Do positions sunset in the future? (If yes, identify sunset date):

Spending/Cash Flow: This table should be completed only in those cases where part or all of the funds authorized by this legislation will be spent in a different year than when they were appropriated (e.g., as in the case of certain grants and capital projects). Details surrounding spending that will occur in future years should be provided in the Notes section below the table.

Fund Name and Number

Department

Budget Control Level*

2006

Expenditures

2007 Anticipated Expenditures

TOTAL

* See budget book to obtain the appropriate Budget Control Level for your department.

Notes: NA

· What is the financial cost of not implementing the legislation? (Estimate the costs to the City of not implementing the legislation, including estimated costs to maintain or expand an existing facility or the cost avoidance due to replacement of an existing facility, potential conflicts with regulatory requirements, or other potential costs if the legislation is not implemented.)

If the legislation is not implemented, McCaw Hall and The Westin would lose catered events to other venues, and The Westin would experience higher staff turnover in their Seattle Center operation due to a reduced level of events for staff to work.

· What are the possible alternatives to the legislation that could achieve the same or similar objectives? (Include any potential alternatives to the proposed legislation, such as reducing fee-supported activities, identifying outside funding sources for fee-supported activities, etc.)

Changes to the agreement between The Westin Seattle and the City require approval by the City Council, so legislation must be enacted to amend the existing agreement.

· Is the legislation subject to public hearing requirements: (If yes, what public hearings have been held to date, and/or what plans are in place to hold a public hearing(s) in the future.)

· Other Issues (including long-term implications of the legislation):

None

Please list attachments to the fiscal note below: