CORAL SPRINGS CITY CENTRE:
OUR WHITE ELEPHANT

June 25,2000 First Draft
July 7:corrected revenue picture (too high)

"There is no business like show business!"

When the  Coral Springs City Centre  was first built, everyone described it as a landmark for Coral Springs,  as it was one of those things that people thought would put us on the map. A few years later, a major renovation had to take place because, this mecca for entertainment had bad acoustics, poor seating and a basketball court where games were played during performances.  It also was running at a deficit.  So the city commissioners spent our money and fixed the sound, added more seats, built a basketball court (in progress) and gave us what we have today:  $600,000 a year White Elephant!

In  1995, the city contracted  with PFM, Professional Facilities Management Inc. to try to turn this venue around.  The City Budget of 1999 presented at the budget workshop on June 20, indicates that  they received approximately $595,000 under the terms of the contract and an additional $200,000 for other expenses, including running of the mueseum. .   According to Kevin Barret, General Manager for the City Centre., the revenues for 1999 were $1,100,000. 

Kevin also mentioned that the center is booked 265 days out of the year. Most venues that are considered successful only book out 200 days of the year as most promoters book out Wednesday through Sunday only and leave Monday and Tuesday out.  With the Center booked to capacity, chances are the revenues can only increase by increasing ticket prices,  increasing rental rates, or increasing ticket sales.   Kevin indicated that we can expect a 15% increase in revenue for 2000.  However, expenses can also increase, as this is not a once sided equation. That's why he was uncertain when the center would break even.

I suppose many of the citizens of Coral Springs will say that a center for the performing arts is needed with a city as big as ours, and culturally speaking, it is important as a growing community.   However, with current issues at hand such the  lack of funds for a full time fire department, and the soon limited resources of a fully built out city, we can ill afford a White Elephant in our community.

We are not New York City, nor are we even Ft. Lauderdale.  With our size population and the stabilization of growth expected in the next few years, we can't afford something that is going to cost us this kind of money. 

If we continue to contract out with the PFM, we will always be at the short end of the stick, having to spend tax payer dollars for the entertainment business. However, the city can ill afford to make the same mistake they made prior to 1995, when they ran the operations, and ultimately, the center into the ground.

So the obvious choice would be to sell the building.  This way the city can recuperate the tax payer's money they spent, payoff the bond issued for construction and millions of dollars in future subsidies.  Bottom line: We would still have the Coral Springs City Centre for us to enjoy and use, and not have the headaches or the expenses,  associated with it. 

Once again the choice is up to the City Commissioners. Let's turn this White Elephant into a Cash Cow!

CITY SHORT CHANGED?  Who's running this show?

June 30,2000 Updated
July 7: Added comment from City Manager, other facts

When we ran our  story "White Elephant" last week, we didn't realize to what extent the problems with the City Centre really was. In fact, the entire article was based upon a few phone calls, the city budget report. In a nut shell: It's worse than we thought.

The information was found after we reviewed the city contract with the management company that runs the City Centre, PFM, as well as the financial statement for 1999. 

According to the contract, the city was supposed to receive 40% of any excess revenues (profits) for 1998 and 45% in 1999.  In fact,the financial statements show that they received only 35% in 1998 and 40% in 1999.  The 'short change' is $18,000 in 1998 and $20,315 in 1999.  That's only what we found carefully studying the documents over a long period of time, 15 minutes!  Michael Levensen, City Manager, says that we are wrong with this figuring as the amount that was received in the current fiscal year really represents the previous years earnings. Confused yet? In other words, PFM does not give the city their 'cut' until the following year.

What's even more incredible is that according to the terms of the agreement the City gives PFM $595,000 per year to subsidies the Centre.  This amount is considered part of the revenue source and is calculated in the revenue sharing formula.  That means PFM is receiving extra money from false profit. .  When we spoke to Kevin Barett, Manager for PFM, he indicated  revenue for the City Centre is $1,160,838, and  failed to mention  it included the $595,000 subsidy.  In fact the revenue from real business  was only $480,000 +/-  with expenses in excess of $800,000! 

PFM's  has a fabulous deal: They get $80K per year as a management fee, and an additional $200K in profit sharing, even though there really is no profit.  All they have to do is maintain the status quo and they make a lot of money. The public is being mislead by this revenue sharing business. In fact if you remove the city contribution of $565,000, the management company would not be entitled to more than the $80,000 that they get to manage the place.

This was a badly negotiated contract.  Not only does it give a bonus to the management company by operating the business at a deficit, but there is no way out of the this hole given the current structure. 

So who's running the show? Just a quick review showed errors in the accounting of the funds from the City Centre. The statements do not reflect actual expenses on the centre such as the carrying of the bond that was used to build the centre. We are not even sure if the expenses include electricity, water, insurance etc. as PFM has not been required to present as detailed a statement as any other business would require. We also discovered errors in the agreements that the city signed. 

It is possible that we are missing something  concerning all the facts and figures.  Perhaps the  City Commissioners do not know what's going on either.  One thing is certain: A complete audit of the contract and financial records of the City Centre is in order, and the City should show us all what are real lcost is in operating the centre.  After all, we must find out who's really running the show.

Take a look at the information for yourself:

Excerpt from Coral Springs City Centre, Statement of Revenues and Expense, Years ended Sept 1999 and 1998.

Letter from the Budget Officer to the City Clerk concerning our request.