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HomeMy WebLinkAbout01/10/2017 13 Plaza Committee Letter to Council 10 I BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 13. For Meeting of: January 10, 2017 ITEM TITLE: Letter from Plaza Committee to Council SUBMITTED BY: Cliff Moore, City Manager SUMMARY EXPLANATION: See attached. ITEM BUDGETED: STRATEGIC PRIORITY: APPROVED FOR SUBMITTAL: City Manager STAFF RECOMMENDATION: BOARD/COMMITTEE RECOMMENDATION: ATTACHMENTS: Description Upload Date Type D report°t 11111/201 7 CA pn"sir Memo [no d <U< :trrnneirnt 1/4/201 T Q.:Amr Memo no D 11/1111/201d Q.:A)A"sir Memo MEMORANDUM TO: Honorable Mayor Coffey and Members of the City Council FROM: Cliff Moore, City Manager Sean Hawkins, Economic Development Manager DATE: January 10, 2017 SUBJECT: Follow Up on Plaza Issues Background On November 8, 2016, Council received a letter from the Yakima Central Plaza Fundraising Committee which provided an update on the first phase of fundraising activities, including pledges, pledges under contract, and cash in hand. In addition, the letter outlined plans for phases two and three of the fundraising effort. The letter asks Council to address two specific questions: 1. Would Council support extending a deadline to December 31, 2017 to have $9 million in pledges secured in contracts? 2. Would Council be willing to identify one or more Council members to join the fundraising committee for Phase 3 efforts (pursuit of corporate, foundation and federal grants)? The letter from the Plaza Committee was placed on the November 15, 2016 Council business meeting agenda. At that meeting, Council voted to table the discussion until the December 6, 2016 business meeting. On December 1, 2016, by email to the Mayor and city manager, Council Member Dulce Gutierrez requested the issue be postponed until the January 10, 2017 Council business meeting. By email to the city manager, a majority of Council supported this request, and the item was moved to the January 10, 2017 business meeting agenda. As a result, the two questions noted above remain on the table for Council consideration. Pledges/Contracts/Payments Meanwhile, staff have continued to work on the process of converting pledges to contracts and receiving payments as per those contracts. The current total amount pledged by the private sector to the construction of the Yakima Central Plaza is $5,310,908.45. The current total amount of private sector pledges for which contracts have been signed by donors is $5,283,671.47. Of that amount, payments totaling $656,804.83 have already been received by the City, some of which include small overpayments by a few donors of their first-year payment commitment. Contracts have yet to be provided to the City for approximately $27,236.98 in pledges. The majority of this amount, $23,500, has been received in pledges within the past few weeks. Each 1 donor has a contract and we do expect them to be returned in the very near future. Of the remaining amount, the City has already received payment and we are just waiting for the contract to be signed as a formality. Based on Council direction, all recently-agreed-to donor contracts include terms requiring full payment of pledged funds within a period not to exceed five (5) years. Three (3) of the previously-agreed-to donor pledges that included full payment schedules exceeding five (5) years have been converted to full payment schedules of five (5) years or less. Four(4) of the donors who made pledges prior to the Council's direction regarding full-payment schedules not to exceed five (5) years have requested no change be made to their original ten- year full-payment schedules. Those four donors are requesting 10-year full-payment schedules because they have made similar commitments to other local projects (such as the SOZO Sports Complex) and personal financial considerations. The total amount pledged by those four(4) donors is $700,000 and all have made payments toward their full pledge commitments during 2016, and at the end of five years, the remaining amount to be received from these contracts will be approximately $220,000. It should be noted, however, that even those payments would come into the City before the debt service on a project bond would be satisfied, so they would be used to help retire the debt. Additional Questions Subsequent to the receipt of the fundraising committee's November 8, 2016 letter, a number of additional questions have been asked of the Plaza Fundraising Committee and staff. The questions are enumerated below and, with input from the committee, staff have prepared the preliminary responses that follow each question. Members of the Plaza Fundraising Committee do plan to be at the January 10, 2017 Council business meeting and may have additional or updated information to share at that time. Questions and Responses: 1. The number of corporate grants and/or donations the committee is pursuing. Response: The Plaza Fundraising Committee is currently actively engaged in soliciting significant donations from forty-three (43) corporations, foundations, and philanthropic organizations and will be pursuing additional such opportunities in 2017. To date, the total amount of funds being solicited from these entities is $3,283,000. Sectors include finance, agriculture, insurance, health, engineering, and local and regional manufacturers. By comparison to the first phase of the fundraising effort, which primarily focused on individuals with the ability to make giving decisions on their own relatively quickly, securing donations from corporate, foundation, and philanthropic sources involves multiple prescribed steps dictated by organizational processes that can be time consuming. And as the committee works through the process of applying for corporate and foundation grants, they will continue working on obtaining more individual/family donors. Currently they have requests out with 68 potential individual or family donors, seeking approximately $lmillion additional in funding. 2 With a fundraising deadline of December 31st, 2017, the committee is confident the necessary steps can be completed and the needed donations from these sources will be secured and under contract. 2. The number of programming commitments the committee has secured or is pursuing. Response: The Yakima Central Plaza has been deliberately designed to serve as an event venue in order to draw people to the Downtown core and stimulate economic activity. The plaza would be home to existing successful Downtown-centered events, such as the Fresh Hop Ale Festival, the Downtown Summer Nights concert series, and the Yakima Farmers Market. As a dedicated event venue, the plaza would allow such events to continue to thrive and possibly expand since street closures would likely no longer be necessary, or would be needed only on a limited basis. As reported to Council in a March 8, 2016 memo, City Staff anticipates a minimum of 95 events to occur in the first year of plaza operations. While final rental rates have not been determined, at a minimum this amount of events would produce $36,500 in revenue to assist with plaza maintenance issues. Even before construction of the plaza has begun, organizations like the Yakima Valley Farmworkers Clinic have expressed interest in hosting events at the plaza such as health fairs, children's activity days, community splash and play days in the fountains. Additionally, as demonstrated by the attached schedule from Yakima Valley Tourism, conventions and conferences taking place in Yakima are likely to utilize the plaza as an available outdoor event venue. 3. The number of potential state grants the committee plans to pursue. Response: At this point in time, the Committee is looking at approximately 12 state and federal grants totaling up to $2M. Examples include the Building for the Arts Grant through the state department of commerce, the National Endowment for the Arts Challenge Grant, and the ArtsPlace National Creative Placemaking Fund Project. 4. The plan for who will operate and manage the plaza long-term. Response: A key element in the success of the plaza will be effective day-to-day operation, maintenance, and programming oversight. Since its inception about two years ago, the non- profit Downtown Association of Yakima ("DAY") has been strategically positioning itself to include in its mission operation, maintenance, and programming oversight of the plaza. Agreements to be considered by the Council at an upcoming business meeting concerning event support and a future Downtown Yakima Business Improvement District contract would situate DAY well to assume day-to-day plaza oversight responsibilities in the future. Currently, agreements are in place with non-profit entities for operation, maintenance, and programming oversight of the City-owned Capitol Theatre, Yakima Convention Center, and Yakima Valley Trolley system. A similar agreement between the City and DAY regarding the plaza could be considered at an appropriate future date. Under such an agreement, a revenue sharing model could be instituted to utilize plaza rental fee revenue to support day-to-day operations, maintenance and programming as follows: 3 1) DAY Fund —Utilize to cover staffing costs incurred by DAY related to landscaping, litter removal, power washing, and other basic maintenance needs of the plaza 2) Capital Reserve Fund—Utilize to make future equipment and infrastructure upgrades and repairs to the plaza 3) Plaza Maintenance Fund—Utilize to cover plaza utility costs (water, sewer, electricity)incurred by the City and costs related to incidental services provided by City staff 4) Debt Service Fund—Utilize to assist in retiring debt assumed by the City related to the plaza The specific percentage of plaza rental fee revenue allocated to each of the four funds would be determined through an agreement negotiation process between the City and DAY. 5. Share the bond repayment model and graph developed by a Plaza Fundraising Committee member as well as any other materials that best visualize how the bond for the project would be structured and paid. Response: The Committee's bond repayment model and graphic is attached to this document. In short, this model projects a 15-year debt repayment of the bond with $9 million in private funds and $1.8 million in City funds for construction. With this model, the total interest cost would be $841,728, which would be the City's responsibility. The graphic depicts a bond repayment plan which, for the first five years, would totally be funded by private donations at just over $8.4 million dollars. The bulk of the remaining private donations, coming in from those contracts with payment schedules beyond five years, would be included with debt payments in years six through ten. City Finance staff have also developed a model and graphic (attached)that demonstrates a slightly-less-costly bond repayment strategy. This model takes advantage of the ability to borrow construction costs internally (from the water/wastewater reserve), and repay that debt at an allowable, but more favorable, interest rate. In this model, the total interest cost would be $574,166. It should be noted that each of these models would be subject to change if interest rates climb. In addition, each of these models is using the figure of$10.8 million as the projected construction cost. While this is the estimate that was developed as the design was being modified, the actual cost will not be finalized until the project is put out to bid. 4 Yakima Valley Tourism /tf 10 North 8th Street Yakima,WA 98901 T: 509-575-3010 F: 509-575-6252 800-221-0751 www.yakimavalleytourism.com Current convention clients that could book the Plaza for an outdoor event(23 events, up to 7,370 people. Most of these folks would walk from hotels or be bused in by event organizers)* Association of WA Cities- 400/600 people American Legion, Department of Washington- 200 National T Bucket Alliance- 120 WA State Farmers Market Association- 200 WA State Veterinary Medical Association- 500 Lutheran Women's Missionary League,WA/AK District- 300 WA Assn. of Prosecuting Attorneys- 100/200 WA State Bar Assn- 250/350 WA State Council of Fire Fighters- 400 WA State Fire Commissioners- 350 WA Fire Chiefs- 150/300 WA State Democrats- 200 WA Health Care Assn.- 175 WA Assn. of Realtors- 240 WA Assn. of Healthcare Engineers- 300 American Public Works-WA Chapter- 500 WA Assn of Sewer and Water Districts- 180 Office of Superintendent of Public Instruction- 100-600 WA Assn for Career and Technical Education (WA-ACTE)- 600 UW- 125/375 WSU- 50-200 WA Assn of School Business Officials- 450 Building Industry Assn of WA- 175/350 Potential clients to pitch the Plaza as a venue (19 events,up to 6,760 people)* Cascade Chainsaw Sculptors Guild- 200 WA State Chili Cook Off- 500 WA Assn. of County Assessors- 150 WA State Assn. of Municipal Attorneys- 180 Assn. of WA Business- 80-300 WA State Independent Insurance Agents-Young Agents Conference- 100 WA State Assn. of Counties- 400 WA Hospital Assn.- 200 PNW District Kiwanis- 400 WA Council of Police and Sheriffs- 100 WA Assn of Sheriffs and Police Chiefs- 350 Assn. of WA School Principals- 275/900 WA State Restaurant Assn- 80 WA State Retail Assn- 150 NW Human Resource Management Assn- 600 Master Brewers Assn- 400 Public School Employees- 800 PNW Vegetable Assn.- 500 WA Wine Grape Growers- 100/450 *A split number like 400/600 it means Yakima has hosted or wants to host two different conferences with those numbers. 50-200 means they have many events in size ranging within those numbers. Yakima Central Plaza 15-Year Bond Debt Service Matched to Private Donations Annual Cash Flows Net CoY Cash Year-End CoY Year Assumed Bond Yield Annual Interest Principal Debt Service _Construction Costs Bond Proceeds Debt Service Private Donations Income/(Outlay) Cash Carryover 2017 0.00% $ $ _ _ $ (5,408,500) $ 8,000,000 $ - $ 2,107,657 $ 4,699,157 $ 4,699457_ 2018 1.00% $ 133,055 $ 1,075,000 $ 1,208,055 $ (5,408,500) $ (1,208,055) $ 1,918,357 $ (4,698,198) $ 959_ 2019 1.20% $ 122,305 $ 1,795,000 $ 1,917,305 _ _ $ (1,917,305) $ 1,918,357 $ 1,052 $ 2,011 2020 1.40% $ 100,765 $ 1,480,000 $ 1,580.765 $ (1,580,765) $ 1,580,023 $ (7411 $ 1,270 2021 1.60% $ 80,045 $ 1,000,000 $ 1,080,045 _ _ $ (1,080,045) $ 1,079,773 $ (271) $ 999 2022 1.81% $ _ 64,045 $ 255,000 $ 319,045 _ _ $ (319,045) $ 75,833 $ (243,211) $ - 2023 1.90% $ 59,429 $ 260,000 $ 319,429 $ (319,429) $ 75,833 $ (243,596) $ - 2024 2.00% 3 54,489 $ 260,000 $ 314,489 $ (314,489) $ 75,833 $ (238,656). $ - 2025 2.20% $ 49,289 $ 270,000 $ 319,289 $ (319,289) $ 75,833 $ (243,456) $ - 2026 2.40% $ 43,349 $ 275,000 $ 318,349 $ (318,349) $ 75,833 $ (242,516) $ 2027 2.50% $ 36,749 $ 210,000 $ 246,749 T _ $ (246,749) $ 8,333 $ (238,416) $ - 2028 2.60% :$ 31,499 $ 220,000 $ 251,499 _ $ (251,499) $ 8,333 $ (243,166) $ - 2029 2.70% $ 25,779 $ 215,000 $ 240,779 $ (240.779) $ - $ (240,779) $ - 2030 2.80% $ 19,974 $ 220,000 $ 239,974 $ (239,974) $ - S (236,9741 S - 2031 2.90% $ 13,814 $ 230,000 $ 243,814 $ (243,814) $ _ - $ (243,814) $ - 2032 3.04% $ 7,144 $ 235,000 $ 242,144 $ (242,144) $ - $ (242,144) $ Totals 111MINF 841,728 $ 8,000,000 $ 8,841,728 $ (10,817,000) $ 8,000,000 $(8,841,728) $ 9,000,000 $ (2,658,728) iania Total Sources and Uses of Funds Sources of Funds Private Donations $ 9,000,000 77% Net City Funds $ 2,658,728 23% Total Sources of Funds $ 11,658,728 Uses of Funds Plaza Construction $ 10,817,000 Interest on Bonds $ 841,728 Total Uses of Funds $ 11,658,728 SOURCES OF FUNDS FOR PLAZA CONSTRUCTION AND DEBT SERVICE $2,500,000 $2,000,000 • $1,500,000 $1,000,000 $500,000 $- ititt — 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Private Donations 'Net City Funds City of Yakima Plaza Construction Funding Sources of Cash Uses of Cash Interfund Loan LOCAL Bond Construction Debt Principal Debt Interest Net City Cash Year End Cash Year Donations 0.75% 2.0% Costs Paid Paid In/(Out)flow Carryover 2016 690,983 690,983 690,983 2017 1,110,783 - - - - 1,110,783 1,801,766 2018 2,330,145 - 6,000,000 (6,000,000) (807,072) (120,000) 1,403,073 3,204,839 2019 1,704,439 835,000 - (4,817,000) (823,213) (103,859) (3,204,633) 206 2020 1,543,895 - - (839,677) (93,657) 610,560 610,766 2021 930,295 - - (856,471) (76,863) (3,040) 607,727 2022 425,295 - - (873,600) (59,734) (508,040) 99,687 2023 77,833 500,000 - (891,072) (42,262) (355,501) - 2024 77,833 600,000 - (908,894) (28,190) (259,251) - 2025 77,833 - - (377,833) (14,513) (314,513) - 2026 15,333 - - (315,333) (11,679) (311,679) - 2027 15,333 - - (315,333) (9,314) (309,314) - 2028 - - (300,000) (6,949) (306,949) - 2029 - - (300,000) (4,699) (304,699) - 2030 - - - (326,500) (2,449) (328,949) - Totals 9,000,000 1,935,000 6,000,000 (10,817,000) (7,935,000) (574,166) (2,391,166) Total Sources and Uses of Funds LOCAL interest is estimated based on recent issues by the state Sources of Funds for similar terms ranging from 1.61%to 2.11%. Private Donations 9,000,000 79% Net City Funds 2,391,166 21% Interfund loan interest is based on expected earnings rates in Total Sources of Funds 11,391,166 the Local Government Investment Pool. Recently rates have risen from 0.14%to 0.45%. Uses of Funds Plaza Construction 10,817,000 The data in this chart represent estimates based on current Interest Costs 574,166 conditions and expectations of uncertain future events. Total Uses of Funds 11,391,166 Funding Sources for Plaza Construction and Debt Service $2,500,000 - - $2,000,000 - - - $1,500,000 - - - - - - $1,000,000 - $500,000 - iiII1iii4 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 November 8, 2016 Yakima City Council Yakima City Hall 129 N. 2nd St. Yakima, Washington 98901 Re: Plaza Fundraising Update Dear Members of the Yakima City Council:. The Yakima Central Plaza Fundraising Committee would like to thank you once again for the time, attention and leadership that you've devoted to this venture. This is going to be a transformational project, and we are grateful to have the opportunity to work collaboratively with our City's leaders on something that will benefit such a broad cross- section of our community for generations to come. Our team has been busy with our fundraising efforts and we wanted to take this opportunity to share our accomplishments, our vision, and to propose a set of benchmarks for the path ahead. PHASE ONE Fundraising Phase One started after the Council vote on July 5, 2016. During this phase, we focused on raising funds through personal asks among our direct network of individual and business associations. • We connected with our current donor base with a group meeting in August. Current donors are an essential part of our ongoing effort, as they can connect the committee with potential new donors, and keep their networks informed of project progress. We will continue to keep in close communication with each of them. November 8, 2016 Page 2 • Harvest has delayed some meetings within the Agriculture community, and now that the growing season is coming to a close, we will resume asks with local, family-owned agricultural companies. • To date, we have 52 signed pledge sheets totaling $5,270,295. On October 13, the city requested that individuals and companies who had pledged funding to the plaza enter into a contractual agreement and provided draft agreements for the donor's review. To date, the city has received 14 of the signed contracts totaling $3,486,500. To date, cash in hand from pledges equals $29,244. However, donors that have signed their contracts have until December 31, 2016 to make their first payment. PHASE TWO We recently progressed to what we have characterized as our Phase Two. Phase Two includes a strategic plan of identifying larger regional companies which have established philanthropic activities in Eastern Washington and devising a personalized approach for each of them. These efforts will naturally take some time to evolve, as each potential donor has its own culture and level of management and process. PHASE THREE Phase Three is the final phase, and the one to which we're very much looking forward. Phase Three involves close collaboration with the City on the pursuit of corporate foundation and federal grants (such as large regional or national companies with interests in the Yakima Valley). These types of grants addressed in the Council resolution from July 5, 2016. Deadlines vary for this type of funding, and most have annual timelines. We request that a "Council Plaza Committee," composed of members of the fundraising committee and council, be formed to begin work on this immediately. In our weekly meeting on November 7, 2016 we determined that December 31, 2017 is a reasonable deadline to accomplish this scope of work to secure the total pledges of $9 million. We would like to update the Council on our progress through ongoing presentations. We would like to propose the following Council Plaza Committee presentation schedule: • December 2016: Update on contracts and other fundraising activity; grant prospect list presented O March 2017: Fundraising Update November 8, 2016 Page 3 • June 2017: Fundraising Update • September 2017: Fundraising Update • December 31, 2017: $9 million in pledges secured We look forward to deepening our collaboration on this important project that is becoming — and will continue to be — a transformative economic driver for our whole community. Sincerely, Yakima Central Plaza Fundraising Committee Brendan Monahan John Baule Kellie Connaughton John Cooper Casey Corr Dana Dwinell Jessica Moskwa Hawkins Liz McGree Bridget Russel Laura Schlect Patrick Smith Roger Wilson