|Convention Center - Profit
Center or Indulgence?
February 24, 2005
Despite tremendous progress in curing Richmond’s fiscal and management woes, there are isolated challenges that defy resolution. One of these is the Richmond Municipal Auditorium, also known as the Richmond Memorial Convention Center.
About a year ago, one of our high-paid workout consultants, Winston and Strawn, reminded us the that the Convention Center lost $477,000 in FY 2002, $159,000 in FY 2003 and $160,000 half way through FY 2004.
Winston and Strawn looked at best practices in other cities and recommended that the City could turn a money-loser into a money-maker by one of three strategies, all of which involved some variation of third-party management.
Like many of the revenue enhancing measures floated during those dark days of staving off layoffs, this one got sidetracked. On May 25 of 2004, I tried to revive it by placing it on the City Council Agenda. From the Minutes of the May 25 City Council meeting
In the matter to consider directing the City Manager to evaluate and implement Option 1 or 2 of the management alternatives proposed by Winston & Strawn in the Convention Center attachment to the report submitted March 23, 2004, to the Mayor and City Council. Councilmember Butt gave an overview of the matter. He stated that the point is to direct the City Manager to evaluate the alternatives, choose one, recommend one to the City Council and move forward. Everett Jenkins, Interim City Attorney, read a list of revenue enhancement measures the Council has voted to move forward. Rich McCoy, Assistant City Manager, gave a report of several entities he has met with to discuss headline acts for the Richmond Convention Center. He stated that a meeting is planned with the Recreation and Parks Commission Executive Committee. He stated that all information is being formulated to include everyone. Mr. McCoy stated that this is a report only and more information is forthcoming. The following individuals spoke on the matter: Corky Boozč, Jennifer Ross, Betty Reid Soskin, Arnie Kassendorf, and Lynda McPhee. Councilmember Butt stated that the City can erase a quarter million dollar deficit and possible come out ahead. He stated that there is an urgency that he does not see being worked on hard enough. He suggested that a separate team be created for the revenue enhancement measures. He asked that a deadline be set for a firm proposal to be considered by the Council. Vice Mayor Griffin stated that discussions will be held with Mr. McCoy to ensure there are days scheduled for the senior activities.
Obfuscation prevailed, and commitments made by staff to pursue the matter soon fell by the wayside.
The Convention Center continued to putter along in its traditional fashion until a couple of months ago when a former assistant to the city manager, D’Andre Wells, now employed by Contra Costa County, put the City’s feet to the fire over an incident in which he felt he was strong-armed by Local 107 of the International Alliance of Theatrical Stage Employees (IATSE). The Wells incident is pretty well covered by an article in this week’s East Bay Express:
Warning: Staging events at Richmond's city-owned auditorium may be hazardous to your pocketbook
The Richmond City Council could pull the plug on its long-standing deal with the local stagehands' union after a promoter who staged a recent event at the city-owned convention center auditorium accused the union of shaking him down for $1,500. A rep for the hundred-member International Alliance of Technical Stage Employees Local 107 says the claim is bogus, but some council members view it as part of a long string of gripes by promoters forced to hire the high-priced union specialists for their events. "People who use the auditorium complain bitterly all the time," says Councilman Tom Butt.
D'Andre Wells, a partner in MK Productions, says his company had booked the auditorium a year in advance to host a televised high-school basketball game between Salesian and Pinole high schools this past December. A week before the event, Wells paid the city $1,237 to rent the facility, which he figured was all-inclusive. But two days before the game, the promoter says he got a phone call from a union guy demanding $1,500 in cash or a cashier's check, "or else my event would be canceled or sabotaged" by cutting off the power. At first Wells refused, but he ultimately wrote $750 personal checks to each of two Local 107 stagehands. A month later Wells, a former Richmond city employee who was laid off in 2003 because of budget cutbacks, filed a legal claim against the city, demanding his money back. In the claim, he asked: "Why must I pay more for the electrical hookup than the entire rental of the auditorium itself?"
Charma Ferreira, the business agent for Local 107, adamantly denies that anyone from his shop strong-armed Wells. Ferreira says the building steward had e-mailed the promoter but that he hadn't responded. When Wells finally called the union's office, Ferreira says the promoter couldn't tell the steward what he wanted to do and had no real plan. Ferreira says he wound up sending just two of his guys over, although the union requires a minimum of four laborers for an event. Wells got a fair deal, he adds. "If Mr. Wells felt like he was being abused, then he doesn't know the industry well enough to know when he's really being taken advantage of," Ferreira says.
IATSE has had a decades-long arrangement to staff staged events at the 3,750-seat auditorium. Its detractors say the union has gotten territorial over the public facility. Public Works chief Rich McCoy says the local keeps keys not only to the auditorium, but to parts of it that city employees can't even access, a claim Ferreira denies. McCoy also says the union has taken possession of fuses necessary to operate some of the electrical equipment. Ferreira acknowledges that the building's steward, Mike Curtis, does have "adapters" to some of the lights, but says they are Curtis' personal property.
Some event planners have complained that when they booked the auditorium the city didn't warn them how much extra they'd need to pay for union stagehands. That's what John Felder says happened to a March 2004 charity fund-raiser for the Malvern-Wilson High School Alumni Association, featuring a performance by gospel group the Mighty Clouds of Joy. Felder, who helped organize the event, says by the time the alumni association was told it would have to shell out nearly $8,000 for Local 107 workers, it was too late to back out. The nonprofit group hasn't done any more events at the auditorium. The facility, meanwhile, needs all the bookings it can get -- according to numbers provided by city finance director Pat Samsell, the hall was nearly $30,000 in the red for the second half of 2004 alone.
Felder also grouses about having to pay Local 107 workers so much even though the union doesn't seem to have a contract with the city. Indeed, it appears Richmond hasn't had a formal finalized contract with Local 107 for years. McCoy, however, says there's an "implied contract," since the city has continued to do business with IATSE. In any case, if city leaders terminate the business relationship, they'll need to find someone else to flick the switches.
That may not be so easy. In one event contract, a city building supervisor justified the use of Local 107, saying it was the only organization in the area that "provides this type of service."
Wells is less polite: Noting that the auditorium's equipment is antiquated, he contends that the union has basically rigged the hall so that its members are the only ones who know how to make things work properly. And, of course, they have the keys to the place.
A week and a half ago, staff provided a long-awaited report on Wells’ complaint in executive session. I have been threatened with jail and worse if I ever reveal what goes on in executive session, so my lips are sealed. The City Attorney reported on the matter as follows, which I believe, by the way, is an inaccurate summary:
Richmond Convention Center IATSE Contract: No final decision. There will be further discussions next week.
There was no executive session the following week, so there is still no resolution. City Council members were provided with a non-confidential written report from Jerry Anderson, Recreation Program Coordinator, and one can glean from it the following:
The future of the Convention center is further complicated by a plan without a clear timetable for some seismic strengthening work, which will require its closure for an uncertain period of time.
Currently, the Convention Center is either losing several tens of thousands of dollars so far this fiscal year, or it is almost breaking even. Richmond’s combination of star-crossed SAP accounting and hand calculations have yielded conflicting results, so nobody really knows. This is not a good sign that exudes confidence in other City financial struggles.
The fact is that the Convention Center is really operated more like a big recreation center than a business. At the end of the day, Richmond’s general fund subsidizes a whole host of users. Some believe that this is a legitimate role of the City, to provide a low cost venue for non-profits and religious organizations as an integral City service. Others believe that Richmond taxpayers expect the facility to be operated at a profit and contribute to the general fund so that income can be used for more traditional City services, such as public safety and street maintenance.
I don’t think we have ever asked the public what they want.