08-22-18 Personnel and Finance (#4)

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CITY OF SOUTH BEND I OFFICE OF THE CLERK come available with this entrance project. We will also, finally, have a dedicated group and field trip entrance. As Aaron experienced one (1) day on our busiest field trip day, it is crazy and not necessarily safe. So as part of the $3.7 million, $1.5 million will go to finishing the entrance next year. Mr. Perri stated, I suggest we pause to talk about the Zoo before I conclude the presentation but I did want to show one(1)more slide to help people understand the mechanism for this funding and where we have come from. So,pre-2014,the City ran the Zoo in-house with their own employees. It was costing us just over$1 million in operating expenses and about$230,000 in capital expenses. We were pushing$1.3 million pre-2014 so we essentially lost that money each year. This past five (5)year agreement was structured as such from$900,000 down to $700,000 on the operating side, and then a consistent $100,000 a year in capital. So if you average that out over the course of the five (5) year agreement, we were spending $890,000 on average. The new agreement includes some continued de-escalation on the operating side from $700,000 to $250,000. That is in exchange for moving some upfront capital. The idea is that the Zoo really believes that if they can address a lot of these deferred maintenance items, that will not only attract more guests but it will attract more revenue. The Zoo is very confident that the upfront capital means more to them today than it will in operating down the road. It is incumbent on the Zoo to keep bringing those private dollars to the table because it will never cost less to operate the Zoo in the future. I show this (referencing a slide in the presentation) not only so you can understand the deal that was negotiated, but to understand we are bringing you a good deal as it will cost us less as a City to finance that package over the term of the agreement. Committee Chair White asked to pause the presentation and opened the floor to questions from Committee and Council Members. Councilmember Broden asked, That $810,000, is that inclusive of any bond expenses or fees? What does that encompass? Mr. Perri replied,That would actually increase the amount. I think the bond is just over$4 million. So you add that in there over the fifteen(15)year agreement and that is another$500,000.Dividing that over fifteen (15), we'll be looking at another $40,000 a year. That is a great point. However, it is still less than where we were before. I don't know exactly where that $1.1 million will come from but once that gets fully baked in the budget,we will bring that back. I know we could do cash as that is a small amount or there could be TIF. That is a few years down the road. Councilmember Scott stated,Karen and I were the only ones,that are here,when we approved the first (1St) plan. The idea was that private funding would come. Do you see that not coming in the way you might have expected back in 2014? The idea was that this would be worked out by the end of this agreement. Ms.Dean replied,Actually I think we've done better than what we had thought. We've raised$3.5 million in private capital investment since 2014 and that definitely shows success. We've had increases in operational revenues as well. I think as far as the upfront capital investment goes, it is in large part due to the deferred maintenance and that is tough to fundraise for. Mr. Perri stated, They adopted that from us. EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 1227 W.Jefferson Bvld I South Bend,Indiana 466011 p 574.235.9221 If 574.235.9173 TTD 574.235.55671www.southbendin.gov 16