MVNA 2013 Annual Meeting

Board members:
Doug Davenport Chris Goelitz (secretary/treasurer) Hans Jannasch (president/NIP rep) Becky Jones (vice president) Arthur Simons (NIP alt/web developer) Bill Scannell Mike Pekin Dick Vreeland

Todays Feature Topic:

The Planned Renovation of the Monterey Conference Center

www.montereyvistaneighborhood.org

Monterey Vista Neighborhood Association

Board members:
Doug Davenport Chris Goelitz (secretary/treasurer) Hans Jannasch (president/NIP rep) Becky Jones (vice president) Arthur Simons (NIP alt/web guru) Bill Scannell Mike Pekin Dick Vreeland

We meet monthly (1st Monday of the month) We are a member of Montereys NIP We support our local CERT program Our annual meetings feature current topics of interest MVNA Annual Picnic: Sept 15 Via Paraiso Park $10/y per household (1st year free to new residents)

www.montereyvistaneighborhood.org mvneighborhood@gmail.com

2013 Annual Meeting

The Planned Renovation of the Monterey Conference Center

Bob Cowdrey
General Manager, MCC

Chip Rerig
Chief of Planning

Kim Cole
Principal Planner

Kim Bui-Burton
Community Services and Library Director

Monterey Conference Center - Opened in 1977

$8 million dollar investment Revitalization of downtown Monterey; increase City revenues Provide facilities to meet the needs of medium sized conferences in Monterey Advance the recreational and cultural opportunities of the community

Monterey Conference Center 36 years later

Group business fills hotel rooms; increasing TOT and sales tax revenues; decreasing day auto trips

Contributed to ~ $300 million citywide in TOT since 1977

*Conference Center TOT not tracked when hotels report TOT

Educational, trade, business conferences

Nonprofits, job & health fairs, cultural events

Monterey Conference Center Renovation & Upgrade

How did we get to where we are today?

Conference Center Facility Condition Analysis 2007 $14 Million Dollars deferred maintenance ADA Compliance issues

Conference Center Renovation/Expansion Feasibility Study 2009

Montereys destination appeal & event planner interest creates opportunities to increase business through renovation/expansion More TOT, new spending and jobs will be created through renovated Conference Center

How did we get to where we are today?

Meeting planners and Advisory Groups: Conference Center needs to update and upgrade, improve technology, increase flexibility, add meeting space

Over the past five years, at least 73 lost groups worth at least $55 million (over $5.5 million in TOT), due to above concerns
Conference Center customers help pay for City services that other cities cant afford; $505 of TOT collected per Monterey resident in 2009 (34% of GF), compared to $105 in Napa and $237 in SF

How did we get to where we are today?

December 2010 RFP for architectural services to explore renovation and upgrade of the Center. Jan-Feb 2011 Stakeholder and Councilmember committee reviewed responding firms.

March 2011 Council authorized hiring of LMN Architects for a Renovation and Upgrade Study
August 2011 LMN presented to Council the final Renovation and Upgrade Study Council directed staff to pursue a Financial Study for the Preferred Alternative

2011 Study Conclusions

Upgrade Finishes
High expectations

Upgrade Infrastructure
Technology, Lighting

Improve Operational Flexibility

Meeting room configurations Divisibility of Serra Ballroom Distribution of pre-function space Increased meeting and banquet space Ability to host multiple events

Increase Capacity
Demand for more meeting rooms and exhibit space

Improve Facility Identity

Needs an identity independent from adjacent hotel properties

Preferred Alternative - Business Benefits within existing footprint

Preferred Alternative - Concept Costs

Level 1
Finish upgrades Infrastructure Technology $8.3 m $1.9 m $1.5 m

Level 2
$894K $525K $322K

Level 3
$6.6 m $1.8 m $926K

Totals
$15.8 m $4.2 m $2.7 m

Construction Cost Totals

Maintenance Items ** Soft Costs Estimate*

$11.7 m

$1.7 m

$9.3 m

$22.7 m
$1.7 m $6.3 m

Total Project Costs*

$30.7 m

* Soft costs to be provided by owner, 25% of construction costs have been estimated for the determining an estimate for total project costs ** Includes additional recommended improvement items from the 2007 Facility Condition Analysis Report

 How did we get to where we are today, contd.

August 2012 Willdan Financial presented funding options to Council February 19, 2013 Council approved the Preferred Alternative Design Scope and the Conference Center Facilities District (CCFD) financing method April16 and May 4, 2013 Council approved first and second reading of Ordinance to form CCFD

Review of Monterey Conference Center financing study

Three Financing Alternatives Studied

1. Transient Occupancy Tax (TOT) increase

2. Conference Center Facilities District (CCFD)

3. Business Improvement District (BID)

Did not consider general taxes for this project (sales, property, etc.), but rather only sources that generate taxes from those that would benefit from the project Bonding assumptions: 30 year bond 6% financing Minimal level of capital renewal funding built in

Comparison of Financing Alternatives

TOT
Tax Equity

CCFD

BID
Assessment based on benefit received Per engineers report 50%+1 of all those assessed 6 months

All hotels @ 12.5% Tax rate based on regardless of hotel type benefit 12.5% 4%-2%-1%

Tax rate Voter approval Timing Administration

2/3 of all registered 2/3 of hotel voters voters Nov. 2014 No additional administration 6 months

Complex set up Complex set up and administration and administration

Recommendation of Financial Consultant

Based upon our analysis regarding the financial feasibility of the Conference Center Renovation, each of the three funding mechanisms described herein are options for the City to consider; however, the one that provides the City with the most flexibility in its taxing structure and bond security is the CCFD. Therefore, Willdans recommendation to the City would be to pursue the formation of a CCFD...

Conference Center Facilities District

Establish tax rates for hotels based on type:
Hotel Type Tax Rate Number of Hotels 3 10 % of Revenue Generated 39% 48%

Adjacent
Full-Service

4%
2%

Limited-Service

1%

54

13%

Generates additional $3.2 million

$2.7 million for debt service $0.5 million for reserve and/or capital renewal

Impact of Monterey Conference Center TOT generation

Financial Analysis
Spending Estimates Overnight Delegate Spending per Day National Average $ 310.51 Monterey $ 337.26

Daytrip Delegate Spending per Day

Event Organizer Spending per Attendee Exhibitor Spending per Attendee Source: HVS 2010

60.95
27.74 115.04

70.22
30.25 120.95

Questions?

Bonding Information The bonds are not a general fund obligation in any way, they are not secured by the general fund, and the general fund is not liable.

Bonding Information Where the general fund could ultimately be affected is in the case of a significant default, resulting in lawsuits, the City could be on the hook for legal costs. However, these costs could be reimbursed when revenues returned (as a loan).

Bonding Information If the CCFD tax was not sufficient, the City could choose to make the debt service payments, and treat the payments as a loan. We would want this included in the bond covenants.

Financial Advisory Services

Coordinate formation of the Conference Center Facilities District
(CCFD)

Planning and execution of the debt issuance

Provide advice related to financing documents Provide market analysis Assist with rating agency and investor briefings

$77,500 Total Paid with debt proceeds

$47,500 services related to bond issuance Paid with Conference Center reserves (reimbursed with CCFD revenue) $30,000 services related to formation of CCFD

Special Tax Advisory Services

Assist the City with determining the rate and method of
apportionment of the special tax

Ensure that the tax is set to provide sufficient coverage

for bond payment and reserves

Assist with special tax election proceedings

$33,210 Total
Paid with Conference Center reserves (reimbursed with
CCFD revenue)

Bond & Disclosure Counsel

Provide legal services in relation to debt issuance
Ensure that bonds are valid and binding obligations Bonds are appropriately issued as tax exempt Ensures City meets required disclosure obligations Validate bonds in court to ensure validity of CCFD

$138,000 Total
Paid with debt proceeds:
$75,000 Bond Counsel $40,000 Disclosure Counsel

Paid using Conference Center reserves (reimbursed with CCFD revenues)

$20,000 Validation Action

TOT
18

16

$15.0M GF 2.9M NIP

14

Million Dollars

12

10

NIP Fund
8

General Fund

0 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14

Transient Occupancy Tax

(General Fund and NIP)

(millions)

Growth

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 est. 2013-14 est.

15.9 14.8 14.7 14.7 16.5 17.3 17.9

4.6% -6.8% -0.6% -0.3% 12.8% 4.9% 3.0%

TOT by Area
Fiscal Year 2011/12 Area Downtown Cannery Row Fremont Munras Other Total TOT Total $4,125,418 $4,685,266 $1,057,259 $2,249,245 $4,374,125 $16,536,312 NIP (16%) $660,067 $749,642 $169,161 $367,079 $699,860 $2,645,810 % of Total 26% 28% 6% 14% 26% 100%

Conference Center - Operating Budget

FY2011/12
Revenues Expenditures GF Subsidy $1,203,546 $2,003,160 $799,614

Mello-Roos Act Key Points

Tax is on hotel property owners

Tax will be allocated on basis of one vote for each dollar

of special tax paid by a hotel

Tax would be collected and administered in same

manner as Citys TOT

Tax lien could be placed on hotel property if delinquent Bonds payable from and secured by special taxes

General Fund is not legally obligated to pay debt service

on the bonds

Next Steps
July-Sept, 2013 Adoption of Resolution of Intention to
Form District

Dec, 2013 Special Tax Election Held Dec-Feb, 2014 Ordinance Passed to Levy Special Tax April, 2014 Validation of Special Tax Completed May, 2014 City starts to Collect Special Tax

Montereys success has been built on the vision of civic leaders and citizens who reinvented the City to meet the economic challenges of their day.

Long Term Vision = Coordinated Results

2005 General Plan

VISION

2005 General Plan = Sustainable Vision

2005 General Plan = Sustainable Vision

Creates an Opportunity to Coordinate Public and Private Efforts

Downtown Specific Plan Catalyst Site Map

Community is Already Convinced about the Look of the Future

Reinvestment is Starting!

301- 375 Alvarado Street

426 Alvarado Street

State Parks

North Fremont Specific Plan

Lighthouse

Monterey Peninsula College

Economic Health
Monterey Conference Center Downtown Specific Plan

Military

Monterey Institute of International Studies

Water Front

Commercial Health

MCC

Services to Residents

City Properties Play a Special Role in Downtown Revitalization

Key Objective - Achieve broader community goals than a private sector approach

City Properties Monterey Conference Center

Downtown Grocery Store Not Highest Use Created an Economic Anchor for the Downtown

City Properties - 595 Munras

Replace Gas Station Previous Entry Feature into Downtown Monterey

City Properties Monterey Conference Center

Fill Hotel Rooms = Stimulates Hotel Business More TOT for City and Neighborhood Projects

Next Steps:
Drafts Completed & Environmental Review Underway: Downtown Specific Plan May/June Drafts Underway Waterfront Master Plan Awaiting Completion of Del Monte/Washington and Multi-Modal Terminal

Water Front
Monterey Conference Center
Private Entities Master Plans

Custom House Plaza

Private Business

Specific Plans

Hotels