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Conference center could come with hefty price tag

Posted: February 26, 2013 5:02 p.m.
Updated: February 26, 2013 5:02 p.m.
 

A new conference center in Santa Clarita could cost the city $2 million a year to finance, on top of the estimated cost of more than $20 million to build the facility itself, according to estimates presented Tuesday.

Wil Soholt, a senior vice president with Kosmont Companies, which is aiding in the master planning process for the proposed center, told city officials Tuesday that even the most successful of conference centers around the nation often fail to cover the cost of both running and constructing the facility.

“(The center) is something that should not be expected, necessarily, to be a moneymaker on its own,” Soholt said.

During his presentation in City Hall, Soholt outlined two potential plans for a new conference center. The first was for a 55,000-square-foot facility in size that would include a 20,000-square-foot ballroom, 10,000 square feet of additional meeting rooms and a 6,000-square-foot outdoor event space.

This floor plan, which Soholt said was recommended based on market research, could attract up to 45,000 patrons a year.

But a structure of this size would come with a hefty construction price tag: anywhere from $18 million to $27.5 million, Soholt estimated.

These estimates also do not include additional costs associated with building a parking structure that could go with the facility. Structured parking could cost between $7.5 million to $17.5 million, Soholt said.

None of these estimates include the cost of purchasing land, Soholt said. And the city could need as much as 11.7 acres to house a 55,000-square-foot center.

The other potential blueprint was for a 40,700-square-foot facility. While cheaper, this proposal would also carry a total sticker price of about $20 million for construction, Soholt said.

On top of the cost of building and maintaining a conference center, the city would also have to pay to finance it, likely through bonds.

Soholt estimated annual debt-service payments on bonds could cost between $1.1 million and $2.1 million a year.

Comparatively, the city would only reap between $150,000 and $250,000 per year in additional tax revenues as a result of people visiting the center, Soholt said.

The city retained the hospitality research firm PKF Consulting USA in 2010 to examine if there was a market and public demand to support a conference center. During its analysis, delivered in 2011, PKF determined Santa Clarita could likely support a center between 40,000 and 60,000 square feet in size, according to city documents.

The city later enlisted the services of Kosmont, a development services firm, and the Gensler architectural design and planning firm in 2012 to develop a conference center master plan.

Tuesday’s meeting was an update on the progress of that plan.

The city held two public meetings to gain input on the proposed center, one in November and one in December.

During those meetings, residents made it clear that they favored a larger conference center, Soholt said.

City Manager Ken Striplin said the next step is for the City Council to weigh in on the plan at a future meeting, likely in late March or early April.

But if comments made Tuesday are any indication, the plan could face an uphill battle for council approval.

Councilman TimBen Boydston said building something that is not self-sufficient would not be in the best interest of taxpayers or city finances.

“If I had run my private business with a $2 million deficit each year, I’d have been out of business in about 10 minutes,” Boydston said.

Mayor Bob Kellar said he agreed with the financial concerns and floated the idea of forging a partnership with the owners of the Saugus Speedway to use land in the area for the center, potentially saving the city money.

“Unless something of that kind happens, I don’t see that (the center) is going to go any place,” Kellar said.

Lmoney@signalscv.com
661-287-5525
On Twitter @LukeMMoney

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