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01-20-2004 - Invitation to Participate in 2005 Tournament of Roses Paradei TO: Andrew G. Pasmant, City Manager and City Council FROM: Steven L. Samaniego, Interim Community Services Director SUBJECT: INVITATION TO PARTICIPATE IN 2005 TOURNAMENT OF ROSES PARADE • City of West Covina Memorandum AGENDA ITEM NUMBER: E-+ DATE: January 20, 2004 PRINTED ON RECYCLED PAPER RECOMMENDATION: It is recommended that the City Council consider not to participate in the 2005 Rose Float Parade. DISCUSSION: The Pasadena Tournament of Roses Association (TOR) has extended the City of West Covina an invitation to participate in the 2005 Rose Parade. In order to hold the place, the TOR requests a reply by January 31, 2004. A $3,700 entry fee must accompany an affirmative reply. The entry fee is not refundable if the City decides not to enter the Rose Parade subsequent to paying the $3,700 entry fee due on January 31, 2004. The West Covina Rose Float Foundation (WCRFF) was established by community volunteers for the purpose of designing, marketing, decorating and raising funds to offset the cost to the City. The goal has been for the WCRFF to take over the event entirely and be self-sufficient, i.e., not dependent o n t he C ity f or f inancial o r s taff r esources. W hile t he W CRFF h as in ade efforts to do so, it has continued to be reliant on the City. It is staff opinion that unless significant changes occur in membership and fundraising, WCRFF will continue to be dependent upon the City into the. foreseeable future. An alternative that could be considered is to reduce the size of the float. The cost of a 35'float is approximately $50,000. Staff is not proposing that the City Council dictate what size float the WCRFF pursue, however Alternative 2 provides for the City to reduce funding to $60,1000 for the construction of the float. We would recommend that the decision of what size of '''float to build or increased fund raising efforts to maintain be left to the WCRFF. TOR has indicated that the invitation may be transferred to the Foundation at the request of the City. However, due to leadership changes, such a request would not be reviewed until after the deadline to respond to the invitation. Options for revenue enhancement, expenditure reductions, and participation are included, (See Attachment #1). Though funding in the amount of $120,000 was approved by the City Council and included in the FY 03-04 Budget, given the economic challenges faced by the City, it is staff s recommendation that continued financial support of the event is not practical at the "current levels. A preliminary financial report is attached (See Attachment #2). The WCRFF met on January 7th and voted unanimously to support the City's accepting the invitation and paying the $3,700 entry fee from the City's contribution. The WCRFF is requesting that two Councilmembers be appointed as liaisons to the Foundation to assist with reorganization. ALTERNATIVES: 1. Status Quo - Accept the invitation and authorize payment of the $3,700 entry from the existing General Fund appropriation; appoint two Councilmembers to serve as liaisons to the Foundation; approve funding of $120,000 for the design and construction from 110-320-2349-6206, and appoint staff support at the same level as previous years. 2. Reduced Funding - Accept the invitation and authorize payment of the $3,700 entry from the existing General Fund appropriation; appoint two Councilmembers to serve Z: ICity Council Agenda ProcessVanuary 20, 2004 Mtg1E-I Invitation to Participate in 2005 Tournament of Roses Parade.doc as liaisons to the Foundation; approve funding of $60,000 for the design and construction from 110-320-2349-6206, and appoint staff support at the same level as previous years. 3. Pay Initiation Fee Only - Accept the invitation on behalf of WCRFF and authorize payment of the $3,700 entry from the existing General Fund appropriation; request that TOR change the invitation from the City to WCRFF; and turn over the event to WCRFF with no additional financial contribution made by the City. 4. Decline the invitation - In doing so, the City loses its place in the parade and would have to reapply for future consideration. FISCAL IMPACT: The net cost of the 2004 float to the City was $62,756 and detailed on Attachment #2. Alternative 1 — Fiscal impact of $123,700 (less funds raised) funded in account #110-320-2349- 6206. Alternative 2 — Fiscal impact of $63,700 (less funds raised) funded in account #110-320-2349- 6206. If the WCRFF reduces the size of the float and maintains current or better contribution levels, the net cost to the City could be zero to $15,000. Alternative 3 — Fiscal impact of $3,700. Alternative 4 — No fiscal impact. Prepared By: 44��?A Kelly XcDonald, Administrative Analyst H ATTACHMENTS Reviewed and Approved by: Steven L. Samaniego, Interim Community Services Director 1. Options for Revenue Enhancement, Expenditure Reductions, and Participation — Attachment # 1 2. Preliminary Financial Report for 2004 Rose Float, Ending January 9, 2004 - Attachment #2 Z: ICiry Council Agenda ProcessVanuary 20, 2004 MtglE-1 Invitation to Participate in 2005 Tournament of Roses Parade.doc Attachment #1 ROSE FLOAT FUNDRAISING OPTIONS Options for Revenue Enhancement The installation of freewav billboard signs. In 2002, the WCRFF reviewed a proposal for the installation of freeway signs for a one-time payment of $550,000 to construct three freeway signs for a term of 25 years. 4 An increase to the Transient Occupancy Tax (TOT) rate. The current TOT tax rate of 10% yields approximately $800,000. A 2% increase in this rate could potentially yield an additional $160,000 annually. According to the rules set forth by Proposition 218, an increase in the TOT would require voter approval. Options to Reduce Expenditures Reducing the size of the float. The City's floats have been between 45' and 50' in each of the five years of participation. It would be possible to design and build a 35-foot float for $,50,000, with a costs savings of about $50,000. The float would reflect this budget and have h,minimal floral presentation, no animation or sound, nor would it be over -height. However, it is?,, difficult to compete for the attention of the judges and the media when such a float is placed ,:between others costing two or three times as much. At $100,000, the City's float is closer to the median and more comparable and competitive to the field of float entries. �r Become a Self -Built Entry. A self -built float is e that designed, 0 on at is ed built and decorated b volunteers as in the case of the t Y City of Burbank, City of Downey, City of Sierra Madre, etc. New builders must be approved and certified by the Tournament of Roses. The start-up cost to be a self -built entry is approximately $19,500. The annual cost is; ,between approximately $41,000 for a 35-foot float and $71,000 for a 55-foot float. Areas in which there could be a cost savings are decorating materials i.e. steel foam paint, g g � � ,,p , flowers, glue, and other supplies) and labor. Other self -built entries, which are managed by incorporated foundations, are able to secure donations or better pricing on materials and volunteers perform the labor associated with the design and construction of the float. The City or Foundation would need to recruit and retain individuals with the necessary skills (welding, steel working, etc.) and certifications who are willing to volunteer their time and commit to see the project through to completion. Of the challenges associated with this approach, this:' is likely to be the greatest. A self -built would not be practical unless the WCRFF board membership consists of key influential members that are able to obtain contributions that would fund the float i, with an estimated cost ranging from $41,000 to $71,000, as well as recruit and retain skilled individuals to volunteer their time to design, build, and decorate the float. The following chart is a rough approximation that does not include contingencies, i.e.; repairs, sound equipment, motors for animation, etc., nor the cost of a $2 million liability insurance policy required by the Tournament of Roses; Z.•ICity Council Agenda ProcessVanuary 20, 2004 MtglAgenda Report 1-20-04 -Options 1-12 515.doc r} Attachment #1 Components and Approximate Costs of a Self -Built Float 35ft 55ft Start Up Engine, Transmission, Rear -End $ 7,000 $ 7,000 Steering and Miscellaneous Parts 5,000 5,000 Chassis 2,500 2,500 Equipment & Tools 5,000 5,000 Start -Up Subtotal $ 19,500 $ 19,500 On -Going Storage $ 6,979 $ 10,968 Flowers 20,000 35,000 Other Materials 20,000 25,000 On -Going Subtotal $ 46,979 $ 70,968 Other Needed Services Floral Designer Welder(s) Steel Worker(s)/Welder(s) Artist for Required Rendering * Costs unknown. Participants with self -built entries generally meet these needs through experienced volunteers. 0 V Z:• City Council Agenda ProcessVanuary 20, 2004 MtgUgenda Report 1-20-04 - Options 1-12 515.doc k • • Attachment #2 Preliminary Financial Report - 2004 Rose Float Rose Float Foundation - Preliminary Financial Report Expenditures (Gross) City Account Activity Construction of Float $ 100,000 Golf Tournament 200 4th of July 76 Summer Concerts 344 Memberships 267 Supplies 319 ** Subtotal -City $ 101,206 Business Account Activity Game Tickets - Float Riders $ 3,416 Private Security at Plaza 545 Donations - Memberships - Merchandise 4,451 Golf Tournament 3,074 Turnarounds 425 Supplies/Administrative Costs 654 Carnival - Summer Concerts 623 Subtotal - Business $ 13,187 TOTAL $ 114,394 Staff and Transportation Costs Staff Time $ 4,540 Transportation 3,917 Subtotal - Staff & Trans $ 8,457 TOTAL $ 122,851 Revenues (Gross) City Account Activity Sponsorships $ '' 18,000 Donations j 1,403 Merchandise 210 CS Events 3,048 Memberships 230 Turnarounds 1,100 Subtotal - City $ 23,991 Business Account Activity Game Tickets - Float Riders $ 13,140 Benefit Nights 187 Donations 6,296 Memberships 730 Merchandise Sales 3,872 Golf Tournament - Turnarounds ;,I 166 Supplies/Administrative Costs - Carnival 780 Summer Concerts 2,476 Subtotal - Business $ it 27,646 TOTAL $ 51,636 II` TOTAL $ 'f 51,636 **Of the $115,302 appropriated for the 2004 Rose Float, $101,206 was spent, leaving a balance ` of $14,096 in account 110-320-2349-6206. City Balance Sheet for Rose Float Projects _ f 1999 Float 2000 Float 2001 Float 2002 Float 2003 Float 2004 Float Actual Actual Actual Actual Actual Actual Cost of Event ** $ 162,585 $ 148,927 $ 120,000 $ 127,915 $ 115,420 $ 101,206 Foundation Reimbursements to City $ 101,623 $ 66,360 $ 2,500 $ 49,770 $ 48,3_1 $ 38,450 Net Cost of Event to City $ 60,962 , $ .. 82567 $ 117,500'r - " $78,145% ** Does not include staff time or transportation costs, estimated at $8,500 per year. Reductions in overall event costs are due to reduced promotional activities. Z: ICity Council Agenda ProcessVanuary 20, 2004 Mtgwgenda Report 1-20-04 Financial.doe I.