Home  |  Out & About  |  Dining  |  Events  |  Singles  |  Classifieds  |  Archive  |  Advertising

The Plan to Save the SAGINAW CIVIC CENTER

By Robert E. Martin

The Logo for The Saginaw Civic Center

The financial crisis concerning the Saginaw Civic Center in many ways

crystallizes the on-going debate between government acting as a catalyst

designed to facilitate business activity, versus government taking on the

burden of actually operating a business entity that would be better off in

the hands of capable professionals.

That the Saginaw Civic Center is an important asset seems to draw universal

agreement.  Apart from forming the core foundation to any notion of

downtown revitalization, it is a unique facility not unlike that of The

Palace of Auburn Hills, that provides international entertainment and major

events which draw patrons and service boundaries that extend far beyond

those of Saginaw County.

In a few short months, citizens of Saginaw County will be asked to pass a

tax levy through a 'special election' that is designed to keep the doors of

the Civic Center open.  More importantly, however, the move would also

place the responsibility for operating & running the facility in the hands

of a private entity, fueled with a goal of making the Civic Center

profitable - something it has not achieved for nearly two decades.

The Money Pit

The City of Saginaw, following the failure to lift the limit of its

property tax cap last year, decided to cut funding to the Civic Center in

December after pouring a record $739,000 subsidy into the facility.

Moreover, back in 1988 the City was subsidizing the Civic Center to the

tune of $300,000.   With similar losses being posted for every consecutive

year since, the entity has cost city taxpayers a deficit in the range of $6

million on the conservative side.

However, it is important to note that this is not unusual. Nationally, very

few Civic Centers or Civic Arenas are known to turn a profit.  Even Madison

Square Garden costs the citizens of New York money to keep it open; yet,

such entities have been known to break even and even turn minimal profits,

such as is the case with Van Andel Arena in Grand Rapids.

Now the ball is in the court of the Saginaw County Board of Commissioners.

For the time being, the Board has levied a temporary 1- percent hike in the

hotel/motel tax in Saginaw County, raising the total to 5 percent. The

$280,000 generated by this tax increase is being used to keep the Center

open until the Special Election, tentatively slated for sometime in April

or May, even though the tax increase itself will run through September 30th.

The Saginaw County Building

Additionally, the responsibility for the Civic Center has been turned over

to a new Countywide Authority headed by Saginaw County Board attorney Peter

Jensen and consisting of the County Controller, County Treasurer, and two

non-County people, Lee Carpenter and Leon Turnwald.

Still, Jensen is quick to point out that the City is still running the

Civic Center.  "Their employees are still in charge up until the millage,"

notes Jensen. "The County has no say over management of the facility, and

we have no reason to believe we could run it any better than the city has.

That's why we're looking at turning it over to private professionals."

According to Jensen, the County Board took the position of obtaining a

complete analysis in order to understand fully the scope of refurbishment

that needs to be accomplished. "Basically, we needed to look at the books

and determine the cost figures involved. It wasn't fair to go to taxpayers

for a millage without knowing this. Now that this process is complete, the

County Controller will be taking a proposal to the County Board in

February," explains Jensen.

More Studies, More Money

Officials hired the Detroit-based firm of Deloitte & Touche to complete a

feasibility study on the best way to rescue the 28-year old city-owned

arena. Publicly & privately financed, the report cost approximately $80,000.

Additionally, the firm of Spicer Engineering was approached to conduct an

engineering and feasibility study in order to determine the actual cost of

renovation.

"Basically, the Deloitte & Touche study said 'Yes, life is left in the

Civic Center," explains Jensen. "They said it represents  a reasonable

investment.  Frankly, I haven't had time to read the report but as I

understand from what I've been told, they said it was a viable structure

and made some recommendations that are consistent with the current function

of the building."

On January 17th, Spicer Engineering issued their report which recommended a

whopping $17 million in improvements, ranging from replacing the heating,

ventilation, and air conditioning systems, repairing the roof, and

replacing ice equipment, to the inclusion of $4 million for fancy

landscaping and an outdoor atrium.

At a minimum level, the Civic Center will require $7 million in repairs.

So why did the figure inflate by $10 million and are landscaping and fancy

atriums that important when considering a facility that is literally

fighting for its life?

"When you look at places like The Palace of Auburn Hills and The Silverdome

you don't see such things present at those facilities, so it is

questionable whether we need them in Saginaw," admits Jensen.

"Most entertainment acts look at the inside nature of the facility, not the

outside, and I believe that is true with people as well," continues Jensen.

"So I think this will be a point of contention, especially when going to

taxpayers to finance it."

"The Spicer Report goes through updating the seating, electrical, and

carpeting, and is a pretty complete report. Whether the County will take

all $17 million, frankly, I suspect we won't.  But then, the philosophy of

the Building Authority has always been to do a top notch operation, and not

cut corners."

A Question of Management

Many insiders at the Saginaw Civic Center that I spoke with refused to go

on record with their statements, but tend to concur that one of the key

problems with the profitability of the Civic Center is due to its current

management, led by Civic Center Director

Clint Walker.

One major local promoter told me they would probably never book another

event at the Civic Center, having been promised certain items for a VIP

Party only to find them not provided for the day of the event.

Similarly, here at The Review, we regularly publish entertainment events of

all major venues throughout mid-Michigan, yet rarely receive press releases

concerning major concert events coming into the Civic Center. And when we

do, the information is often incomplete, lacking showtimes, ticket prices,

and other vital information.

Has anybody analyzed exactly why the Civic Center is losing money?

"I think Clint has done an outstanding job keeping the Civic Center going

without any improvements," answers Jensen. "I mean, Clint's had a boiler

that he's kept going forever."

A former county executive has his own theory. "The problem with the City of

Saginaw is that they can't afford to retain good people. Consequently, they

have a large turnover of personnel and you find a lot of second and even

third level management people rising to positions of power."

When asked about the current management of the facility, City Manager Reed

Phillips is also supportive. "I think Clint's done a fine job for what he's

had to work with.  The staff costs at the Civic Center aren't that much

money, probably no more than $300,000 for about 10 employees."

Adds Jensen: "Frankly, we know the city couldn't run it and I have no

reason to believe that as a governmental entity the county can do any

better.  That's why the County Board has required us as part of the

transaction to use private management firms,"

"You mentioned how Grand Rapids was being run fairly profitably, and one of

the bidders on the Saginaw Civic Center is SMG.  The other private bidder

is Global Spectrum.  These are two of the largest firms in the United

States, although SMG is much bigger than Global.  If they can't handle the

job, I don't know who can.  And if you read the Deloitte report, from what

I've been told, civic centers do not make profits, but they don't lose

$700,000 per year either."

According to Jensen, the way this management arrangement works is based

upon a sliding scale.  If one year after coming into the picture they

Center loses $500-$650,000, they management firm would receive 25% of the

money they saved, all the way up 35% for any loss less than $400,000. And

if the Center makes money, they rebate the county $25,000.   "There is a

financial downside for the private firms," notes Jensen, "and they do have

an obligation to make sure they operate it better than it has been."

But has anybody looked at simply selling the Civic Center outright?  Is it

right for taxpayers to be paying money to private firms for simply

minimizing losses?  When Pine Knob and the Palace were bought by the

Nederlanders, it took the financial burden completely off the shoulders of

taxpayers.

"How many private investors want to purchase a structure that needs

millions of dollars of repair, and besides, they all operate this way,"

answers Jensen. "SMG runs 71 Centers around the U.S. all bigger than the

Civic Center.  Another major distinguishing factor that poses a problem is

that when acts come to the Palace, they aren't allowed to travel here on an

off night to do a show like they once could."

"If Garth Brooks is at the Palace and we wanted to bring him into Saginaw

at a lower rate, we couldn't do it because now they all have 100 mile

restrictions written into their contracts.  The philosophy is 'why should

Garth come to you when you can go to him."

So What's Next?

The amount of millage that will be asked of taxpayers to finance

the Civic Center is still up in the air.

"That figure has to be hammered out," explains Jensen. "Last summer a .45

mill increase was bandied about, but one of the reasons the County Board

decided not to do anything was because that number wasn't based on anything

concrete. We didn't know where it was coming from or how much work needed

to be done."

"We're meeting with the Blue Ribbon Civic Center Task Force, and they play

an important role in this. They have an active interest in running and

pushing for the election, and the County Board has directed us to work with

them.  We'll show them the Spicer Reports and give them the private bids

and let them review it.  It will be curious to see whether they think SMG

or Global is better prepared to handle it.  We'll also find out what they

think of the scope of work and how much they want done.  Following that,

we'll review their comments and vote on what we think we're willing to

spend."

"The Controllers office puts the costs and bond counseling together. Both

outfits have good track records, but SMG has been in business of 13 years

and Global Spectrum has been around for 7 years.  Global is owned by

Comcast and both are very capable."

Conclusions

That the Saginaw Civic Center is worth saving is without question.

As stated earlier, it serves a vital role in terms of fueling the area's

need for world-class entertainment.

And while the private companies will no doubt do a much better job running

the facility than has been true in the past, with stronger contacts to

major tours and shows, the issue ultimately comes down to whether people

wish to pay a small amount of money to keep the doors open and see their

favorite events locally, or whether they'd rather drive 80 miles south to

do so.

"There is a price with everything," notes Reed Phillips, "and it's

important not to lose perspective.  For example, many people believe that

Heritage Theatre is the only important asset at the Civic Center, because

of the Broadway Play series and the like, yet one WWF event in the Civic

Center probably generates more revenue than the entire Broadway series put

together."

Adds Jensen: "You cannot really compare the Civic Center to the Palace

because it's like apples & oranges. The reason the Palace can draw strong

is because it sits with 4 million people around a 30 mile radius, so the

ability to fill it is easier than any event here, and they have more

latitude to cut deals with acts."

"I think the Civic Center is good for the community and I believe the Board

of Commissioners made a good decision," concludes Jensen. " The tax base

for the City has been reduced, the County is more diffuse, and the Civic

Center still represents a good, viable forum for ALL of Saginaw County. It

certainly serves the county to have this type of facility, and I am a

proponent of it."

"Up to now, the Civic Center may not have that strong a track record, but

what's important is that nationally known professionals have looked at this

facility and said 'yes, it can work.' And we're doing everything we can to

make it work."

"Every kid that goes to an ice show, or the theatre, or a tractor pull is

enriched by it, and when you look at the amount of shows that serve the

County as a whole, certainly it is not very expensive. "

"I think if we keep the increase under one mill, maybe .70 mill, we can

achieve our objective."

home  |  out/about  |  events  |   personal  |  store  |  classified  |  real estate  |   forums  |  archives  |  contact
© 2009 Review Magazine.  All rights reserved.