The meeting was called to order at 9:17 a.m., by TDC Chairman, Dwight Lewis

AGENDA ITEM I – APPROVAL OF MINUTES FROM PREVIOUS MEETING

MR. LEWIS called for a Motion to accept the TDC Meeting Minutes of May 21, 2001. Lori Campbell Baker seconded a M otion made by Christine Travis. The Motion carried without objection.

AGENDA ITEM 2 – PRESENTATION OF CURRENT PERATIONAL BUDGET

MR. LEWIS asked Rick Hamilton to give a presentation on the Current Operational Budget, Item 2 of the Meeting Agenda.

MR. HAMILTON advised that the County Council asked for the Operational Budget at the last meeting. I have handed it out to everyone. This is a copy directly from the budget as presented to the County Council and approved for this current year. If the Board Members or anyone in the audience have any questions on the Budget, I will be glad to answer any questions in this regard.

Lori Cambell Baker asked if the Land Rent was the biggest revenue feature…is that for like Bike Week, etc., to which Mr. Hamilton responded: No. The Land Rent is for leases from the Ocean Center to Adventure Landing and to the parking garage.

Having no additional questions regarding the Operational Budget, Mr. Lewis moved to the next Agenda Item.

MR. LEWIS interjected that before the Members got moving on "how the money is going to be raised," "how will it be spent," "who gets what," "whether it’s divided up East, West, Southeast, Southwest, how much is here and there," I think we need to look at this project and make sure that we agree that the project needs to be done. No need to have bloodletting before deciding that we need move forward. We need to decide what the we’re doing, what the usage is, and make sure we have the determination that we need to move forward. We need also to determine how we will move forward, and the revenues we anticipate generating before we discuss some of the other issues.

MR. HAMILTON: As we proceed, I am reminded that you may not have been as involved with the numbers and the extensive involvement as the County Council and other folks.

Let me share with you how the Ocean Center operates. . .each year I submit a budget to the County Council for approval. That budget is in the Council’s budgetary process on an annual basis, and our numbers here at the Ocean Center is audited on an annual basis by an outside auditor that the County hires, as well as,the internal audit of staff accounting.

Everything that we do here at the Ocean Center goes through the Volusia County purchasing department, the personnel and law department, so its not just Rick and the operation here, but there is County oversight to ensure County policy and procedures are followed.

Ocean Center business has increased dramatically in the last few years. As you look at the numbers, you will likely question how the business has increased and the revenues has not. The primary reason for that a lot of our business has increased in the convention and meetings industry and decreased in the commercial, namely, concert and trade show type industry that are open to the public. For those events, on our rental rates, we receive a base rent plus a percent of gross revenues. In addition, commercial events attract people that buy hot dogs, popcorn, sodas, etc. Commercial events are much more lucrative than the convention and meetings business.

At the same time that this statement is made, the other side of the equation is the convention business is much more lucrative to the community then is the commercial business, because it puts people in hotel rooms, restaurants, and shops. It’s important to understand these factors as we proceed.

Other issues that have taken place within the past few years, that I want the Council to be aware of, is the occurrence of several situations in which revenues were lost. One such situation took place about 6 years ago, with the passage of an Ordinance by the City of Daytona Beach, that prohibited Ocean Center outside sales. That cost the Ocean Center about one half million dollars annually. [Per Chris Travis, however, "t saved the City a lot of grief."]

Another situation, illustrative of revenue loss, occurred when parking garage negotiations went to an outside private contractor, resulting in the Ocean Centers’ loss of parking revenues, amounting to approximately $400,000 annually. While it is displayed here as rent for a Land Lease for the parking garage, but the method in which that arrangement is structured, the revenues for that lease agreement are not paid back to the Ocean Center until the garage reaches a break even point. It is at the break even point is the Ocean Center paid back, plus interest is accumulated, so it’s really an accounts receivable for us. At the point the garage becomes profitable, the County shares fifty percent of the profit and the profit is split between the private operator and the County. These are historical situations that this committee may lack awareness. Questions and additional discussion of budget items follows.

MR. HAMILTON responds to questions:

Gilly Aguair- regarding debt service, stating, "the debt service should be on the last page, it was sent to you. And today, I have debt service back to the beginning that I will give to you." Mr. Hamilton explains that the debt service is derived from the tax collection and it goes directly through the County. The County pays that out of the resort tax collection.

Tom Staed- when was it refinanced? Was that the 40 million to begin with? Mr. Hamilton responded, "it was refinanced in 1987, [before my time] then again in 1993. Mr. Staed continues by asking, what was the amount of the principle? Mr. Hamilton responded, "the only one that I know, Mr. Staed, was in 1993, the refinancing [I can go back and get the numbers for you] was approximately $29 million, and since then it has been approximately $23 million.

Mr. Lewis – what I would like to see is what the revenue is collect from on a simplified form that everybody can just look at …how much have we collected, what is our payment, and then, whatever is left over where is that account and how much is in that account and what do we do with that account? I think that is a pretty simple.

Mr. Staed – that’s something we’ve always wanted.

Mr. Lewis – I think if we can come up with that…Mr. Hamilton responded, "we can do that. I can pull stuff directly off the County system…I can come up with it." Mr. Lewis continued, we got the Minutes to all the questions and we need to make sure that we get those answered and those things are actually sent to Committee members prior to the meeting giving us a chance to look them over before we get to the meeting.

AGENDA ITEM 3 – JUSTIFICATION FOR EXPANSION – CURRENT

UTILIZATION

MR. LEWIS – asks Mr. Hamilton to present the Agenda Item:

MR. HAMILTON: At the last meeting, I presented the feasibility study to you. If you have reviewed the study and have questions about it, I want you to share them at this point in time or send them to me in writing. In addition, I spoke with the consultants who did that study last and they have volunteered to come and meet with the Committee at any time. I can arrange for this meeting if you would like for them to come in and explain their background and the numbers they have generated for us.

My staff has just handed out the business for this past fiscal year that the Ocean Center did, as far as the breakdown of Convention/Tradeshows, Consumer, Community, Family Performances, Sporting Events, Concerts and Meal Functions, and the back-up for the top cover sheet to present you with a total.

With regard to the report, for the Economic Impact, we use a factor here which is very low for a national average of $75 per day per delegate. We use a multiplier of 2 instead of 3. In comparison, the national average now is almost $200 that normally use a multiplier of 3. As you can see, the facility usage on the report is 288 days this past fiscal year. What that does is when we have maintenance days and move-in, move-out days, the facility is pretty much utilized on prime dates, i.e., on Thursdays through Sundays of each week there are very few available days.

As noted in the consultant’s feasibility study, it is recommended that we currently have a need for an additional 75,000 plus square feet of exhibit space and a need for a large ballroom of approximately 30,000 square feet, and additional meeting rooms. The consultant’s based these recommendations to enable the Ocean Center’s growth to the next tier in our market, we must have exhibit space and food and beverage space to service bigger conventions and meetings that will come into the area.

Currently what happens is the larger groups that come into the community utilize the majority of Ocean Center space for exhibits and use the hotels in the area for food and beverage, since we lack the room to accommodate both. That basically is where we are with the study at this point in time. The bottom line, which I think Mr. Lewis alluded too earlier is, if in fact the community wants it, then how do we fund it and what amount of money do we have to fund it, and go from there.

MR. HAMILTON responds to questions:

Mr. Lewis – tell me what shows or trade shows or people that we have missed or are missing. Please expound on what we are not being able to attract, or what we would attract with the expansion.

MR. HAMILTON

Most of your larger convention associations in the market like to bid on fees and services

for 2,000 plus people, and the current space we have available is not adequate space for that. Currently, we can exhibit or feed, but we can’t do both. The types of groups we are missing are national and regional associations and the corporate market segment, simply because we do not have the space. Another occurrence that has a huge impact on this community, is the Adams Mark development; further justifying the need for the space here due to the fact that we will have quality sleeping rooms in the area. The groups and associations that I refer to will look for a minimum of a 1,000 quality hotel rooms within walking distance of a convention and meeting space. We have never had that until this point in time, and we are now at that point. The other types of events we do have, especially during "special events periods," have outgrown the facility. Companies like Harley-Davidson and the Circle Track Trade Show, those types of events that take place on an annual basis have advised that any space we build they will utilize.

GILLY AGUIAR - how many people or delegates can we handle at this point, to be able to feed them separately, in this facility?. . .you have the exhibits, the breakout meeting rooms and you want to feed them. What would you say is our cap?

MR. HAMILTON - probably a 1,000 people. We have done 1,200, but it's really pushing it when we're up that high.

TOM STAED - how many exhibits can we do?

MR. HAMILTON - the most we could do is 300.

GILLY AGUIAR - in this report we have, it breaks it down---Section 4, page 32, says less than 500 attendee's is 30% of available events; 500 to 1,000 is 31%. So at this point, theoretically, we could capture 61% of the market of shows that are out there, is that right? Does that make sense to you?...because this report contradicts itself.

MR. HAMILTON - it does and I don't know if I can accurately answer the question without looking at it. What I recall is the report saying that is the number, but we don't have both spaces.

GILLY AGUIAR - it breaks down what is available out there, what the numbers are, and where we were planned in. Basically, it says that 30% of the shows are 500 or less; 31% are 500 to 1,000 and 15% are a 1,000 to 2,000...so, my theory there is that we take that 61% at this point. The report suggests with the upgrades, we would meet as a 2nd tier behind Vegas, Orlando and Chicago.

MR. HAMILTON - theoretically, what you are saying is correct.

CHRIS TRAVIS - I want to make sure I understand...what we're saying is that you can do the exhibits, but in order to do the food they would have to move to a hotel. Is that correct?

MR. HAMILTON - No. I'm saying we can do up to 300 exhibits and up to 1,200 people in food service.

CHRIS TRAVIS - you mentioned something about the hotels...

MR. HAMILTON - When we have larger events...what happens is the arena affords 46,000 sq ft, the conference center approximately 14,000 sq. ft., so we can feed in the conference center and exhibit on the arena floor. Most of the events now, that utilize the facility, utilize both the conference center and the arena floor as exhibit space, and therefore isn't room to feed them. So they must breakout into smaller groups and go to the hotels or, what have you.

CHRIS TRAVIS - so my question is, would we by expanding the Ocean Center move to a higher tier that gives us more people, or, are we just displacing the business from businesses and bringing it to the Ocean Center?

MR. HAMILTON - No. We would move to a higher tier that would bring us city-wide busin ess that would utilize this facility and still utilize the hotels for the smaller conference needs that they have.

STUART ARP - if you're looking at either or, the biggest thing would be the exhibit space. Because with our space for a new ballroom we could feed about 1,500 to 1,600 people.

TOM STAED - will they be connected

STUART ARP - No. The buildings connected but not where you could go...

MR. HAMILTON - what Stuart is saying is absolutely correct. But I want you to understand that money for this facility is not in ream of the space, but in the big step.

STUART ARP - what do you typically get for a booth in terms rental to a group?

MR. HAMILTON - The facility currently rents for $2,000 a day for the arena floor, and $1,000 a day for the conference center. It's cheap, but at the same time when you do a comparison, which we have done, our facility space in the state of Florida or in the southeast is very competitive and right along with everyone else. If we go up much higher than that, without all the amenities necessary to go along with it, then we will put ourselves out of the market.

MR. LEWIS - could you give us a breakdown of that...how much other facilities are charging for like services.

MR. HAMILTON - Yes. I can present that survey to you. I can get that in the mail or at the next meeting.

STUART ARP - do you lose more business because of lack of exhibit space or...

MR. HAMILTON - Usually because of lack of exhibit space. There again, because of the marketplace they can use your hotel and other hotels for breakout rooms and food service.

STUART ARP - when we go after big groups, we lose them because we can't do it or you can't do it and that's where we [the Adam's Mark] see the issue as a problem.

MR. HAMILTON - There again, I want everyone to understand that we are moving into another market setting.

STUART ARP - I'd love to have both. If it's phasing, then I hope we focus on the exhibit halls.

CHRIS TRAVIS - is there additional revenue that comes in...like, if they rented the whole facility its $3,000 per day. What do we get on top of that?

MR. HAMILTON - The additional revenue that comes in is through the food and beverage business mainly. Most likely, if rent a suite, then you service that suite.

TOM STAED - what is the percentage of gross food sales?

MR. HAMILTON - The overall average is about 39%. Food is around 20% and liquor is 39%. There are some other mark-ups and additional charges like tables, chairs, etc.

Much discussion follows regarding costs and comparisons.

JIM BAZEMORE - remember if you expand you will probably increase the operating subsidy from the resort tax. That will take some of that capacity out.

FRANK GUMMY - that's certainly one of the things we will need to figure.

GILLY AGUIAR - on the facility itself, when they did a comparison on meeting types and services, i.e., corporate meetings, conferences etc.,... they rated us poor. ... You need 15,000 to 16,000 seats to bring in the big name acts. If you try to do them in this facility, you would have to get $85/$90 per ticket to make any money. So, we've lost the ability to use this for a concert. My though is, what kind of money are we looking at to get the extra space and add on some kitchen space to retrofit this building, and take out the concerts. We did 5 concerts in 1999 and not one was a sell out.

MR. LEWIS - my point is we don't have the size to do it, so we should look at retrofitting this building and forget about concerts and go for the extra exhibit space and meeting room space...that's where the growth is. The study shows that.

STUART ARP - how many days do large religious groups use the facility as a large assembly space? Some groups like that are interested in staying in hotels.

MR. HAMILTON - Like I said earlier, the commercial events, concerts and public shows, generate much more revenues for this facility. On average a concert will generate about $40,000 per night.

(Substantial discussion follows on religious group meetings.)

AGENDA ITEM 4 - DISCUSSION OF CAMPUS CONCEPT vs. ONE BUILDING 

MR. LEWIS - Discussion of Campus Concept verses One Building: I think things may be changing, but I believe history shows that evolving can ruin this great center. I'm not so sure the expansion...I know you're going for the campus style, but that may be the road to the future, but when somebody comes into a place, I think they want to come inside, stay inside and move around inside. I don't think they want to go across the street or that way or whatever. That's my two cents to start off with.

Question from the audience: County Councilman Big John

Q. Is there any of those papers available for audience participants?

MR. LEWIS - No. It's top secret, you have to make a request...We've got some here John.

MR. HAMILTON - I agree with Mr. Lewis and I want the TDC to understand that when I looked, and the consultants' looked at the possible funding sources to do the expansion, the campus concept was a compromise. In a lot of respects, at the same time, it was one they believed would work and I believe it worked. If you recall originally, I approached the County Council with a stressed skin fabric building and I did that because that was one we could afford. It would not require any more tax support, that was the type of facility we could afford. As Mrs. Fine went out and did some marketing research for us and some other things happened, I felt the community wanted a more upscale facility. And, as I've gotten more and more into it, I'm a firm believer that if we're going to build it, we have to build it right to attract the people that are out there in the corporate market world and national association markets. The only thing that for you today, and I wanted everyone to see, and I called the consultant's to verify these numbers and they are based on a national average, I put together for you is two sheets that show two sketches that show possible financial possibilities. The first one shows the campus concept. [Mr. Hamilton describes the conceptual drawing] The price at 21,600 sq. ft., at $50 per sq. ft., to be landscaped and covered for a $1,081,000.

The contiguous plan, which is on the back sheet, that the consultant's have prepared shows the exhibit hall to the west. [Mr. Hamilton describes the conceptual drawing] When you add those up, Level 1 Concourse Area is 70,800 sq. ft., at $125 per sq. ft., is $8,850,000. Level 2 is 60,000 sq. ft., at $125 per sq. ft., is $7,000,000, and utility relocation that has to come out if a structure is built on top of it, is $1,250,000, for a total cost of $17, 600,000. The difference between the two, for the same amount of exhibit space and ballroom space is $16,520,000. Those are the consultant's numbers, not mine. I want the TDC to be aware that if we go to a contiguous plan, we either looking at building a smaller space, or, raising more money. That's the reason I brought that up.

STUART ARP - I don't understand the Concourse Atrium connector, that to connect the two buildings, why do you have to do this all the way around? You don't a facility now that has that, why do you have to have it?

MR. HAMILTON - I'm just presenting what the consultants have recommended. The consultants contend that to do this in a first class manner, you must have the largest place on A1A and as well all the way down Atlantic Ave. It's not my recommendation but it's theirs. But the TDC expressed to me a concern about people being out in the elements and having to go from one side of the building to the other, or going from the existing building to the new facility, and that is really the only way to keep that from occurring...that you can move from anyplace in the facility indoors and not be exposed to the elements.

MR. LEWIS - on the $1,080,000, what does that include? And the contagious includes the building, but I don't see anything...

MR. HAMILTON - That's the canopy and landscape. This is just the walk space, the campus complex is the next, all the facilities, and this is the concord area, not the building.

CHRIS TRAVIS - how much more to build it?

MR. HAMILTON - About $30,000,000. The difference between a contagious building and campus concept is about $16,000,000. The cost of the space is basically the same. Again, the consultants felt that the ballrooms and meeting rooms, in addition to going on top of this facility, would justify the need to have another kitchen in that location.

STUART ARP - so construction costs would be the same for the concourse verses the covered walkway that's the $16,000,000 difference. I still challenge the need to do a concourse around the building.

JIM BAZEMORE - Mr. Chairman, if you are going to have two or three separate buildings and have food operations in one or all three, will that not necessitate three different kitchens? Because you're out in the open and you can't carry food in the open. So, your operational costs, as far as food service, has to be much higher, correct?

MR. HAMILTON - I would think so.

TOM STAED - if you build a contagious building that's a 1,000 sq. ft., on level 1, that cost $8.89 dollars, level 2 cost $7.50, so the building will cost $17.6?

There is significant discussion among TDC members concerning proposed costs and space. Questions continued as follows:

CHRIS TRAVIS - do we have research...have we polled the conventioneers and meeting planners to say what will sell for them? Cause, ultimately, we need it to be successful and if it's the wrong set-up, then it's a waste of money.

JIM BAZEMORE - when we first put this thing together, a number of us got in airplanes and went and looked at...and if we're going to think about these two concepts, nothing is more impressive than seeing the actual thing. You're talking about two totally different concepts. Costs are very important, and we're in this for the long term. So, I would like for us somewhere down the road to consider, let's pick 3 or 4 of these things and do it again, because we're talking about big money.

MR. LEWIS - I think that's a good idea, we are talking about big money for this community. I think it will serve well if Rick could get us comparable places so we can go there and look.

TOM STAED - what do hotel people think we need?

STUART ARP - ...what do we need to take the next step? We're in need of 70,000 additional sq. ft.,...

The TDC continue discussion on square footage needs, costs, project feasibility, and the need for information from the Hotel/Motel Association.

MR. LEWIS - these are real important questions. I think maybe on the next meeting agenda, we can have someone from the Hotel/Motel Association to give a presentation of their needs. In order for us to do our work and have our discussions, we can't include the Association on a regular basis. However, I think it's important to have input from the Hotel/Motel Association, and any one else who wishes to speak.

The TDC Committee Members discuss tax revenues. Committee Member, JOHN MASIARCZYK, however, discusses his interest in knowing what the community wants.

LORI CAMPBELL-BAKER - a community awareness luncheon was discussed in the last meeting, where we would plan and publish a report where we could see what the community wants. Did that ever get on the books?

MR. HAMILTON - No, we were waiting to see the decision on that in today's meeting.

MR. LEWIS - It will be important to get a report out to the various groups that we want to invite, so we won't be discussing something they haven't seen. I can see us having a meeting and everybody's there for a "feel good meeting," but, to make their presentation meaningful, then they should be supplied with required materials.

CHRIS TRAVIS discusses marketing materials and cooperative agreements to which MR. HAMILTON responds that the Marketing Plan is currently being revised, per the request of LORI CAMPBELL-BAKER at the last meeting The Marketing Plan should be available in the next 2 weeks. TDC Committee Members discuss obtaining marketing information from other cities and what markets (cities) should be included in the data collections.

TDC Committee Members discussed the viability of increasing exhibit space with food facilities and utilization of the arena floor for banquet facilities; to which MR. HAMILTON advised this plan would not be marketable because meeting planners want first quality space, much like the Adam's Mark and/or other hotel banquet room space. TDC Members continue discussion of square footage space for campus concept verses one building concepts. STUART ARP advised the Adam's Mark will be expanding its ballroom. TDC Members also discussed hotel room availability for the Ocean Center expansion.

MR. LEWIS - reads Agenda Item 5... I think this one is history for now. (laughter from Members and the audience)

AGENDA ITEM 5 - DISCUSSION OF HOW MUCH MONEY

NEEDS TO BE GENERATED TO PAY FOR

EXPANSION IF COUNCIL FEELS NEED IS

JUSTIFIED

TOM STAED - I'd like to see 3 or 4 concept plans each priced, to see exactly what we're talking about...to see the kind of money we're talking about. We need to see what can the County raise; what are the geographical boundaries, and maybe we can figure out where we can't go, and see where we can go.

AGENDA ITEM 6 - APPOINTMENT OF VICE CHAIR PERSON

MR. LEWIS - We can now move on to Agenda Item 6 - Appointment of Vice Chair. LORI CAMPBELL-BAKER accepted the nomination for Vice Chair. MR. LEWIS moved the question which was unanimous accepted by the TDC Committee Members.

AGENDA ITEM 7 - OLD BUSINESS

The Members discuss future dates to follow-up on new concept plans. MR. HAMILTON discussed problems that would be encountered to obtain new plans by August, 2001. The Members directed MR. HAMILTON to look at contiguous facilities and minimize the costs. LORI CAMPBELL-BAKER indicated the TDC Board should go on record as having consulted the hoteliers.

MR. HAMILTON - I've not heard a consensus or anyone in here for a campus concept. Does anyone want a campus concept?

LORI CAMPBELL-BAKER - I think we need to hear from the hoteliers.

JIM BAZEMORE - it would speed things along if someone would speak to that now.

Gary Brown spoke on behalf of the Hotel/Motel Association: We certainly objected to the campus concept based on Evelyn Fine's report and we don't think that's the way to go. So, I don't think you'll get any objections from hoteliers if you [the TDC] want to contiguous building concept.

The TDC Members continued discussion of the campus concept plan: TOM STAED ...we need to see what we can add to take us to another level in the exhibition business, and how do we pay for it. GILLY AGUIAR stated he didn't want to be a part is to go out and build something that the money allowance doesn't afford. If we can't build it right, why waste the money.

AGENDA ITEM - 8 NEW BUSINESS

MR. HAMILTON - Mr. Bazemore submitted to me a list of questions that I would like to pass out to the Members. If you have any additional questions to add, please let me know. I will get the questions and mailed to you.

County Councilman Big John makes the following statement regarding the meeting room (it stinks) audience cannot hear discussion and concern over the lack of handouts.

ADJOURNMENT

The next scheduled meeting is 9:00 a.m., on August 15, 2001. Mr. Lewis adjourned the meeting at 10:40 a.m.

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