Outsourcing Modesto's Centre Plaza still up in air as talks hit snag

MODESTO -- At a special meeting this afternoon, City Council members will discuss a new development in the proposal to outsource management of Modesto Centre Plaza.

In July, the council ordered staff to negotiate a five-year agreement with the DoubleTree Hotel to manage and operate the downtown convention center for the city.

In recent correspondence, the hotel's parent company demanded that the management contract be separate from a catering deal, which gives the hotel rights for seven more years to provide food service for events at Centre Plaza.

The council has wanted the exclusive catering contract to run concurrent with an agreement for managing Centre Plaza and directed staff to emphasize that in the talks with DoubleTree. Instead of running until May 2019, the catering deal would expire along with the outsourcing contract in 2017.

City officials believe the hotel's lucrative catering contract caused other convention-center management companies to shy away from bidding on Centre Plaza.

"The DoubleTree took exception to that stipulation," Finance Director Gloriette Genereux wrote in a report for today's meeting. She cited correspondence from the DoubleTree refusing to revise the catering contract.

Council members will decide today whether that's a deal breaker.

"I don't know how we will vote," said Mayor Garrad Marsh, who has wanted to tie the two agreements together. "I don't know if the (DoubleTree) will come to the table if we don't (remove the stipulation). I know they will come to the table if we do."

The mayor has said he's willing to give a preference to the DoubleTree in future bidding for Centre Plaza if the catering deal is revised.

Kim Brooks, sales and marketing director for the Westmont Hospitality Group, the hotel's owner, said in a letter last week that Modesto's bidding process for Centre Plaza didn't specify a revised catering contract, so that wasn't factored into the pricing in the company's proposal for operating the convention center.

Deal wanted before holidays

Today's special meeting was called because the next scheduled council meeting is in early September and officials want to have a Centre Plaza outsourcing contract in place before the holidays in November and December.

The DoubleTree, adjoining the convention center, and a city employees group were the only entities that made formal proposals last year to manage Centre Plaza. The city has sought to outsource the convention center operation to erase a general fund subsidy for the project projected at $670,000 this year.

If the hotel's catering contract were to run out sooner than 2019, it would potentially level the playing field for entertaining bids from other companies with an interest in Centre Plaza.

Under the DoubleTree's proposal, the city would pay the hotel $663,000 in management fees over the five years, plus performance incentives worth up to $150,000. An outside management contract would result in eight staff members and about 20 part-time workers being cut from the city work force.

The City Council will meet at 4 p.m. today in the basement chamber of Tenth Street Place, 1010 10th St.

Bee staff writer Ken Carlson can be reached at kcarlson@modbee.com or (209) 578-2321.