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HomeMy WebLinkAbout2010-01-26 - AGENDA REPORTS - STUDY-CONFERENCE/CONVENTION (2)UNFINISHED BUSINESS DATE: Agenda Item: CITY- OF SANTA CLARITA AGENDA REPORT City Manager Approval Item to be presented by: January 26, 2010 Jason Crawford SUBJECT: COMMISSION A FEASIBILITY STUDY TO DETERMINE DEMAND FOR A CONFERENCE OR CONVENTION CENTER IN SANTA CLARITA DEPARTMENT: City Manager's Office RECOMMENDED ACTION Authorize the appropriation of $30,000 from Council Contingency Account 19300-5401.001 to "Tourism Account 11302-5161.002 for a two-part feasibility study to determine demand for a conference or convention center in Santa Clarita by PKF Consulting and authorize the City Manager or designee to execute all documents, subject to City Attorney approval. If phase one of the study ($20,000) reveals a need for a conference or convention center in Santa Clarita, PKF Consulting would conduct phase two of the study ($10,000) exploring financing models as well as recommending possible site locations. BACKGROUND Tourism remains a strong and growing industry for the Santa Clarita community and its businesses. Attractions like Six Flags Magic Mountain, abundant recreation facilities, historic points of interest, and a growing repertoire of annual events make Santa Clarita a first -choice for vacationing families, corporate meetings, retreats, sports tournaments, and more. Santa Clarita's strong business growth adds further support for the local hospitality market, providing mid -week business for area hotels. The consensus among tourism partners has been that there is a need for increased conference and convention space, which is currently limited to Hyatt Regency and Embassy Suites, and that with increased space, Santa Clarita could attract an increased number of conferences, conventions, and revenue generating tourism events. Many tourism partners believe this type of facility, which will attract a variety of events year-round, will play a major role in maintaining the vitality and health of the area's tourism industry through meeting, conference, and event attraction efforts. At the October 27, 2009, City Council meeting a decision on whether to jointly commission a feasibility study with The Packard Companies (applicants of the proposed Sheraton hotel) to determine demand for a conference or convention center in Santa Clarita was postponed by City Council. During that meeting there was discussion about the PKF Feasibility study being directly related to the proposed Sheraton project, which had been appealed and discussed at the City Council meeting on September 8, 2009. It is important to note the PKF Feasibility study and Sheraton Hotel are two separate and unrelated projects. The proposed PKF feasibility study for a conference or convention center is an independent analysis and project and is not directly related to any existing or proposed hotel property in the City of Santa Clarita. At the October 27, 2009, meeting, City Council requested staff reach out to all hotels in the City and determine their support of the study and ability to participate financially. Staff received responses from the major hotel properties within the City's limits, all of which indicate they support commissioning the study, but cannot contribute financially. Although The Packard Companies originally had offered to contribute financially toward the study, since all hotels are not able to participate financially, it is staff's recommendation that the City of Santa Clarita pay for the entire ($30,000) study from the Council Contingency fund so as to avoid any perceived conflict of interest and keep the study unbiased. Staff researched and found other Southern California cities such as Ontario, Pasadena, Long Beach, Los Angeles, and Anaheim have also commissioned similar type studies funded completely by the cities themselves. ALTERNATIVE ACTIONS Other action as determined by City Council. FISCAL IMPACT City Council approve the transfer of $30,000 from Council Contingency Account 19300-5401.001 to Tourism Account 11302-5161.002. ATTACHMENTS PKF Study Proposal ?F.5 -, Ui F �ur4y is uy: All I* Wj October 15, 2009 r4aVIIL1,n ;f 11; [ti 4:-W.X. Rinhr {71:31 E23-�P•1C - ".3 tr. erm Ms. Amy Sparks , Administrative Analyst — Film and Tourism City of Santa Clarita 23920 Valencia Boulevard Santa Clarita, California 91355 Sent via email: ASPARKS@sania-clarita.com Dear Ms. Sparks: In accordance with your request we are pleased to submit this proposal for professional services in connection with an analysis of potential market demand for a proposed Conference Center to be located in Santa Clarita, California. We understand that you are evaluating the feasibility of several sites and would like us to assist you in determining the demand for and market feasibility of the proposed project. To assist you in your planning process, we would be pleased to conduct a study to ascertain the potential market demand for the proposed facility. -Assuming that sufficient market support is indicated, our analysis will assist you and your associates in establishing a program for the development of the property. PKF CONSULTING PKF Consulting (PKF/C) is an international firm of management consultants, industry specialists, and appraisers who provide a full range of services to the hospitality, real estate, and tourism industries. Other related companies include the PKF Capital, which provides real estate transaction and capital markets services, and The PKF hospitality Research Group, a hospitality -related market research firm. Headquartered in San Francisco, the firm has offices in New York, Philadelphia, Boston, Atlanta, Houston, Dallas, Los Angeles, and Washington, DC. PKF Consulting is a member of the Pannell Kerr Forster International Association, with 300 offices in 90 countries. The firm is staffed and equipped to provide the leisure and real estate industries with the following key services: Asset Advisory Services, Transaction Advice and Due Diligence, Appraisal and Valuation, International Hospitality Consulting, Public Sector leisure and Tourism Consulting, and Litigation Support. Member, PKF International, Ltd. 3 Ms. Amy Sparks City of Santa Clarita Senior professionals of the firm have been a part of the hospitality business for upwards of 25 years. They head teams of consultants who bring a broad range of experience - corporate finance, hotel operations, resort planning, international tourism - to meeting client needs. Real estate professionals carry MAI (Member of the Appraisal Institute), CRE (Counselor of Real Estate) and ISHC (International Society of Hospitality Consultants) designations. METHODOLOGY The study will be conducted in phases and the work program will be concerned with the determination of current and potential future demand in the market area, the assessment of existing and potential future supply and the share of the market that could reasonably be attained by the proposed project, and our facilities recommendations. Our work plan for the study will be as follows. AREA REVIEW We will gather and analyze relevant economic data regarding the market area to determine whether the overall economic environment in the area appears to be suitable for the development of a conference center. We will examine correlations between key economic factors and the demand for such a facility and will utilize any available forecasts of these indicators in our evaluation of potential future demand. We will perform primary market research in the site area, consisting of interviews with key demand generators, inspection and evaluation of competition and discussions with persons familiar with the meeting and conference facilities market. Among those with whom we will conduct such interviews are: ➢ Owners and managers of potentially competitive facilities ➢ Government officials in zoning, development and transportation ➢ Major employers in the area ➢ Convention and Visitors Bureau representatives ➢ Civic Organizations ➢ Event Planners On the basis of the foregoing research, we will prepare estimates of future growth in demand for, and the supply of competitive facilities in the market area. Then, using the information gathered in our research, we will estimate growth in demand for and project demand for each of the next five years, expressed in terms of potential event bookings and attendees. PRELIMINARY FACILITIES RECOMMENDATIONS Based on the foregoing we will develop preliminary recommendations as to the order of magnitude of the amount of square footage of the proposed facilities and the type of facilities to be provided. A Ms. Amy Sparks City of Santa Clarita MARKET SHARE ESTIMATES ' 3 The focus here will be on estimated demand for the subject project. Upon completion of the estimate of market area supply and demand for the future, we will estimate the share of the market that the proposed facilities should reasonably be expected to capture for the first five years of operation. Based upon an analysis of the sources of demand available to the subject property and its estimated competitive position, we will estimate the potential number of meetings and events that could potentially be achieved, and project revenues in current value dollars over the first five years of operation of the facility. Since the estimated operating results will be based on estimates and assumptions that are subject to uncertainty and variation, we will not represent them as results that will actually be achieved. Preliminary Report At the conclusion of Phase I we will provide you with a preliminary letter report setting forth our key findings and conclusions. This report will be designed for your internal use and for discussions with us. PHASE II ANALYSIS OF THE SITE LOCATION This part of the study is designed to evaluate the each of several potential sites in terms of its opportunities and constraints for development. Some of the factors to be examined include: ➢ Access ➢ Visibility ➢ Ambiance ➢ Relationship to demand generators ➢ Advantages/disadvantages of the site versus the major competitors FACILITIES RECOMMENDATIONS As part of our analysis, we will review plans for the proposed project and make recommendations as to the proposed facilities, including: ❑ Number, type, and mix of meeting rooms 11 Banquet and meeting space requirements ❑ Other facilities and amenities These recommendations are intended to provide you with the basis for a design program for the facility. 5 Ms. Amy Sparks Cily of Santa Clarrro REPORT We will codify our conclusions into a report for the internal use only of you and other members of the planning team and for discussion purposes with us. Once you have reviewed the draft report, we will be pleased to review it with you, address any additional questions or concerns necessary and then finalize our report. LIMITATIONS OF THE STUDY Our final report will be subject to the attached assumptions and limiting conditions. PROFESSIONAL FEES Our professional fees for the assignment will be on a per diem basis based on our current hourly billing rates and the hours required. We estimate that they will approximate $20,000 FOR Phase I and $10,000 for Phase I1. Any hours expended due to changes in the scope of the assignment will be billed at our normal hourly billing rates, which are as follows: In addition to our fees, we will be reimbursed for any out of pocket expenses incurred in performance of the assignment such as travel of our representatives while in the field, long distance telephone, computer costs and photocopying. We estimate that our expenses will not exceed $1,000. If, at any time during the course of the study we form an initial opinion that there is insufficient demand for the proposed facilities, we will suspend the assignment at that point and discuss our findings with you. If you desire that we terminate the assignment at this point, we will write you a brief letter summarizing our findings and charge you only for that time actually incurred to date at our regular per diem rates, plus expenses. As is customary in assignments of this nature, we request a retainer of $10,000 at the start of the assignment. The remainder of our fees and expenses will be billed and payable on a progress basis. STUDY TIMETABLE Based on our present scheduling, we could commence the assignment within one week of receiving your authorization to proceed. We anticipate providing you with a draft of our Phase I report within Pal Per Hour Senior Vice President $300-$450 Vice President 250- 300 Associates 200- 250 Consultants 110- 185 In addition to our fees, we will be reimbursed for any out of pocket expenses incurred in performance of the assignment such as travel of our representatives while in the field, long distance telephone, computer costs and photocopying. We estimate that our expenses will not exceed $1,000. If, at any time during the course of the study we form an initial opinion that there is insufficient demand for the proposed facilities, we will suspend the assignment at that point and discuss our findings with you. If you desire that we terminate the assignment at this point, we will write you a brief letter summarizing our findings and charge you only for that time actually incurred to date at our regular per diem rates, plus expenses. As is customary in assignments of this nature, we request a retainer of $10,000 at the start of the assignment. The remainder of our fees and expenses will be billed and payable on a progress basis. STUDY TIMETABLE Based on our present scheduling, we could commence the assignment within one week of receiving your authorization to proceed. We anticipate providing you with a draft of our Phase I report within Pal Ms. Amp Sparks City gl'Santa Clarita 9 three to four weeks of starting the assignment. We will commence Phase II upon your authorization and we anticipate that it will require two to three weeks to complete. APPROVAL AND ACCEPTANCE If the foregoing correctly states the nature of the work you wish undertaken at this time, and arrangements are satisfactory, please sign a copy of this proposal and return it to us, together with the requested retainer, as our authorization for the assignment. If, on the other hand, you have any questions, please do not hesitate to call on us. We appreciate having the opportunity to submit this proposal and look forward to working with you and your associates on this most interesting assignment. Sincerely, PKF Consulting r� By Bruce Baltin Senior Vice President APPROVED AND ACCEPTED: Title Date STATEMENT OF ASSUMPTIONS AND LIMITING CONDITIONS This report is made with the following assumptions and limiting conditions: Economic and Social Trends - The consultant assumes no responsibility for economic, physical or demographic factors which may affect or alter the opinions in this report if said economic, physical or demographic factors were not present as of the date of the letter of transmittal accompanying this report. The consultant is not obligated to predict future political, economic or social trends. Information Furnished by Others - In preparing this report, the consultant was required to rely on information furnished by other individuals or found in previously existing records and/or documents. Unless otherwise indicated, such information is presumed to be reliable. However, no warranty, either express or implied, is given by the consultant for the accuracy of such information and the consultant assumes no responsibility for information relied upon later found to have been inaccurate. The consultant reserves the right to make such adjustments to the analyses, opinions and conclusions set forth in this report as may be required by consideration of additional data or more reliable data that may become available. Hidden Conditions - The consultant assumes no responsibility for hidden or unapparent conditions of the property, subsoil, ground water or structures that render the subject property more or less valuable. No responsibility is assumed for arranging for engineering, geologic or environmental studies that may be required to discover such hidden or unapparent conditions. Hazardous Materials - The consultant has not been provided any information regarding the presence of any material or substance on or in any portion of the subject property or improvements thereon, which material or substance possesses or may possess toxic, hazardous and/or other harmful and/or dangerous characteristics. Unless otherwise stated in the report, the consultant did not become aware of the presence of any such material or substance during the consultant's inspection of the subject property. However, the consultant is not qualified to investigate or test for the presence of such materials or substances. The presence of such materials or substances may adversely affect the value of the subject property. The value estimated in this report is predicated on the assumption that no such material or substance is present on or in the subject property or in such proximity thereto that it would cause a loss in value. The consultant assumes no responsibility for the presence of any such substance or material on or in the subject property, nor for any expertise or engineering knowledge required to discover the presence of such substance or material. Unless otherwise stated, this report assumes the subject property is in compliance with all federal, state and local environmental laws, regulations and rules. Zoning and Land Use - Unless otherwise stated, the projections were formulated assuming the hotel to be in full compliance with all applicable zoning and land use regulations and restrictions. Licenses and Permits - Unless otherwise stated, the property is assumed to have all required licenses, permits, certificates, consents or other legislative and/or administrative authority from any local, state or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based. Engineering Survey - No engineering survey has been made by the consultant. Except as specifically stated, data relative to size and area of the subject property was taken fi-om sources considered reliable and no encroachment of the subject property is considered to exist. Subsurface Rights - No opinion is expressed as to the value of subsurface oil, gas or mineral rights or whether the property is subject to surface entry for the exploration or removal of such materials, except as is expressly stated. Maps, Plats and Exhibits - Maps, plats and exhibits included in this report are for illustration only to serve as an aid in visualizing matters discussed within the report. They should not be considered as surveys or relied upon for any other purpose, nor should they be removed from, reproduced or used apart from the report. A STATEMENT OF ASSUMPTIONS AND LIMITING CONDITIONS (continued) Legal Matters - No opinion is intended to be expressed for matters which require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate consultants. Right of Publication - Possession of this report, or a copy of it, does not carry with it the right of publication. Without the written consent of the consultant, this report may not be used for any purpose by any person other than the party to whom it is addressed. In any event, this report may be used only with proper written qualification and only in its entirety for its stated purpose. Testimony in Court - Testimony or attendance in court or at any other hearing is not required by reason of rendering this appraisal, unless such arrangements are made a reasonable time in advance of said hearing. Further, unless otherwise indicated, separate arrangements shall be made concerning compensation for the consultant's time to prepare for and attend any such hearing. Archeological Significance - No investigation has been made by the consultant and no information has been provided to the consultant regarding potential archeological significance of the subject property or any portion thereof. This report assumes no portion of the subject property has archeological significance. Compliance with the American Disabilities Act - The Americans with Disabilities Act ("ADA") became effective January 26, 1992. We assumed that the property will be in direct compliance with the various detailed requirements of the ADA. Definitions and Assumptions - The definitions and assumptions upon which our analyses, opinions and conclusions are based are set forth in appropriate sections of this report and are to be part of these general assumptions as if included here in their entirety. Dissemination of Material - Neither all nor any part of the contents of this report shall be disseminated to the general public through advertising or sates media, public relations media, news media or other public means of communication without the prior written consent and approval of the consultant(s). Distribution and Liability to Third Parties - The party for whom this report was prepared may distribute copies of this appraisal report. only in its entirety to such third parties as may be selected by the party for whom this report was prepared; however, portions of this report shall not be given to third parties without our written consent. Liability to third parties will not be accepted. Use in Offering Materials - This report, including all cash flow forecasts, market surveys and related data, conclusions, exhibits and supporting documentation, may not be reproduced or references made to the report or to PKF Consulting in any sale offering, prospectus, public or private placement memorandum, proxy statement or other document ("Offering Material") in connection with a merger, liquidation or other corporate transaction unless PKF Consulting has approved in writing the text of any such reference or reproduction prior to the distribution and filing thereof. Limits to Liability - PKF Consulting cannot be held liable in any cause of action resulting in litigation for any dollar amount which exceeds the total fees collected fi•om this individual engagement. Legal Expenses - Any legal expenses incurred in defending or representing ourselves concerning this assignment will be the responsibility of the client. 7