May 24, 2019 City Commission Meeting

Announcements

• Health Week: Next week is Avitus Health Week. 📅 [00:23:22]
• Expo Center Contract Start: The management services contract for the Heart of Oklahoma Exposition Center with Global Spectrum (Spectra) is set to officially begin on 📅 August 1. [00:06:36, 00:19:33]
• Employee Transition: Spectra representatives have begun meeting with existing employees, with a full presentation on benefits, training, and resources scheduled for next week. [00:05:26, 00:05:31]
• Youth Rodeo Observation: Spectra will have a team on-site to observe the mid-July Youth Rodeo for future planning and support, while staying out of the way of current operations. [00:19:38]

Key Decisions & Votes

• Management Services Contract for Heart of Oklahoma Exposition Center: The City Council voted to authorize the City Manager and City Attorney to execute a contract with Global Spectrum (Spectra) for the management of the Heart of Oklahoma Exposition Center. The approval is contingent upon identified modifications to the draft language.
  • Vote: The motion carried 7-0. [00:23:10]
  • Key Modification: The City Attorney and City Manager are authorized to tighten the language in Section 6.3 regarding the non-solicitation and non-hiring of management-level employees, specifically clarifying it to apply to "director level above" positions. [00:20:40, 00:21:11]

Financial Matters 💰

• Contract Terms:
  • Duration: An initial five-year term with a five-year option for renewal at the city's discretion. [00:09:31]
  • Base Management Fee: A fixed fee of $120,000 per year, treated as an operating expense. [00:09:38]
  • Incentive Fees:
    • Quantitative: Spectra can earn 20% of any improvement over the three-year average operating loss benchmark (which is just under $500,000). [00:09:50]
    • Qualitative: Up to $25,000 annually based on performance in areas like community engagement, innovative sales and marketing, and customer survey scores, with the city having the opportunity to score these measures. [00:10:00]
  • Spectra's Upfront Investment: Spectra will provide a $350,000 upfront capital investment to cover transition costs, employee relocation, corporate resources, account setup, marketing, website enhancements, and potential facility upgrades (e.g., point-of-sale systems, scoreboards). [00:10:32]
  • Investment Amortization: This $350,000 investment is amortized over seven years. If the city chooses not to renew the contract after the initial five-year term, the city would be responsible for paying back the remaining two years of the unamortized investment to Spectra. [00:18:40]
• Projected Financial Impact (Over Five Years):
  • Savings: Projected savings of over $600,000. [00:07:54]
  • Revenue Growth: Projected revenue increase of $2.1 million. [00:08:00]
  • Event Days: Spectra projects 234 quality event days in the first year, focusing on successful events that drive revenue and attendance. [00:07:01]

Public Comments / Council Concerns

Council members raised several questions and concerns during the discussion of the contract:

• Contract Termination: Questions were raised about the city's ability to terminate the contract if it doesn't work out. It was clarified that while mutual termination is always possible, unilateral termination is not explicitly outlined in the draft, and the five-year term was chosen to allow sufficient time for implementation. [00:13:16, 00:14:11]
• Existing Contracts: Spectra confirmed that all existing contracts at the Expo Center would be honored. [00:15:19]
• Budget Negotiation: Concerns were voiced about the process if the city and Spectra could not agree on annual budgets. The contract requires good faith negotiation, with judicial intervention being a last resort. [00:16:28]
• Non-Solicitation Clause: A council member expressed concern about the broad language in Section 6.3 regarding the non-solicitation and non-hiring of "management level employees." Spectra agreed to tighten this language to be more specific, likely to "director level above." [00:20:22]
• Investment Payback: Clarification was sought and provided regarding the city's responsibility to repay the unamortized portion of Spectra's $350,000 investment if the contract is not renewed after the initial five years. [00:18:40]

Agenda Summary Table