City may outsource Modesto Centre Plaza management

05/15/2012 1:32 PM

05/15/2012 9:59 PM

Three City Council members on Tuesday called for negotiations that could lead to the owners of the DoubleTree Hotel taking over management of Modesto Centre Plaza.

Mayor Garrad Marsh and Councilmen Dave Geer and Joe Muratore, who comprise the Audit Committee, supported the outsourcing option after considering alternatives to improve the bottom line at the center.

An outsourcing deal potentially would eliminate a city general fund subsidy that has ranged from $500,000 to $700,000 a year since 2008. The proposal to bring in a private operator is likely to stir emotions among community groups that use the center for fund-raisers and other events.

The city has subsidized Centre Plaza since it was built in the 1980s as the centerpiece for Modesto's downtown revival.

Revenue shortages have convinced city leaders they no longer can justify the subsidy, which could be used for public safety or other purposes.

DoubleTree, which owns half of the center, would use its parent company's resources to market the city-owned conference facilities and increase bookings for conventions, trade shows and other events. No details of a potential contract were discussed at Tuesday's meeting.

The council members said if talks with DoubleTree are not successful, a backup plan is to raise fees and downsize the city staff team that manages the center.

An outsourcing deal could eliminate the equivalent of seven full-time city positions. The city employs 20 part-time workers who set up events.

Auditors said an outsourcing contract could reduce the annual general fund subsidy to $75,000 or less. With a city staff reorganization, the city would need to pull $250,000 to $375,000 from the general fund each year.

DoubleTree was the only private firm that submitted a bid when the city requested proposals from outside contractors last year.

Consultants with Moss Adams LLP, which serves as auditor for the City Council, said there are concerns regarding the feasibility of the DoubleTree's bid.

Marsh suggested that other firms did not submit proposals because of a concessionaire contract with DoubleTree, which gives it exclusive rights to cater events. Marsh said the city wants to discuss those catering rights in negotiations or invite other bidders after that deal expires in about five years.

Kim Brooks, marketing director for Westmont Hospitality Group, representing DoubleTree, said the company's sales staff can market the center more effectively than city staff. City employees who work at Centre Plaza declined to comment Tuesday.

It remains unclear whether the public will support turning a community asset over to a private operator.

Cecil Russell, president of the Modesto Chamber of Commerce, told the committee the deciding factor should be, "What option will bring more people to the center and create more economy for the area. How do we get more people to our community?"

Judy Kindle, executive director of Sierra Vista Child & Family Services, said Tuesday that local nonprofit groups are closely watching the discussion. Sierra Vista has held an annual Hearts for Children Gala fund-raiser in the center's ballroom for which the city has provided a discount on fees.

"We try to do things as cost-effectively as possible, and we really appreciate when we get help in that area," Kindle said. "Our concern is that may not happen anymore. ... I hope if the DoubleTree (manages the center), they will work with the nonprofit groups."

According to the Moss Adams review last year, the center's operating revenue from bookings, rentals and commissions is down 20 percent from a high of $900,000 in 2007.

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

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