City of Homer

Memorandum No. 05-139

To: Mayor & Council

From: Dennis Novak, Chair
Homer Conference Center Feasibility Study Steering Committee

Date: July 27, 2005

Re: Recommendations regarding a conference center in Homer

Yesterday the Conference Center Feasibility Study Steering Committee, established by the City Council through Resolution 05-11 on January 24, 2005, held what we formally regard as our final meeting. The purpose of the meeting was to determine what recommendations, if any, we would provide to the City Council regarding follow-up to the conference center feasibility study completed on June 30 by Conventions, Sports & Leisure, International. As you may recall, the City of Homer obtained an Alaska Department of Commerce, Community and Economic Development “Mini-Grant” for this project, with matching funds provided by the City, the Homer Chamber of Commerce, and the Homer Bed & Breakfast Association.

Based on results of a market demand analysis that involved telephone surveys with meeting planners for 35 state groups in Alaska, the study predicted that demand for a conference center in Homer would be “moderate.” Further information was provided to help guide decision making in regard to type of facility, size, facility features, and other considerations. A table presenting the most basic conclusions of the study is provided below.

Type of facility	Recommended size	Estimated utilization days per year (local & non-local events)	Total economic benefit (annual direct and indirect spending by out-of-towners)	Potential costs (public subsidy)
1. Stand-alone (City owned and managed)	10,000 sf banquet/multipurpose space; 3,000 sf breakout meeting space	113	$2.62 million	$203,000 annually (before debt service and reserve funding)
2. Public/ private partnership with hotel	7,500 sf banquet space; 3,000 sf breakout meeting space	114	$1.754 million	will depend on particular partnership agreement
3. Joint use build-out with another public project	6,000 sf total meeting/banquet space	76	$847,000	possibly break-even, with staffing and overhead shared with operations of the primary facility (e.g., new City Hall)

The conclusions and recommendations of the Conference Center Feasibility Study Steering Committee are as follows:

· The committee believes that a conference center in Homer would provide significant economic benefit to the community and should be pursued as part of the City’s overall economic development strategy.

· We believe that the results of the market analysis, as presented in the feasibility study, may understate the likely demand and therefore the likely benefit of a conference center in Homer. This view is based on a review of the data collected for the study, in which only 35 groups were surveyed out of an estimated 100 such groups around the state. We believe the actual number of “state groups” is probably closer to 200, and that the 35 groups that were surveyed may not provide a reasonable (representative) sample. While we do not recommend that the City attempt to gather more information at this time, private developers or other groups may wish to do so.

While we recognize that Homer does indeed have weaknesses that would impact our ability to compete with other cities and towns for conference business, we believe that the study may overstate some of those weaknesses while understating or failing to recognize some of our strengths. We also believe that future development in Homer, most notably Town Center, will put Homer in a much stronger position to attract conferences.

· The Conference Center Feasibility Study presents four options for consideration: a stand-alone conference center (owned and operated by the City), a public/private partnership with a hotel, a joint use build-out with another public project (such as a new City Hall), and “do nothing.” We believe the last option should be rejected. Regarding the other three options, our assessment at this time is that a public/private partnership with a hotel might be the most viable and desirable alternative. It appears that a stand-alone conference center is the least viable option. However, we recognize that new information and opportunities could change this assessment.

· The committee recommends that a strong preference be given to proposals that locate a conference center in Town Center, for the following reasons:

o It is in the community’s best interest to promote commercial development on vacant lands in the City center rather than auto-oriented strip development. This position is supported by recommendations for land use in the Homer Comprehensive Plan.

o As envisioned by planners (see draft Town Center Development Plan), Town Center will incorporate many features and amenities that will make it popular with both residents and visitors. In Town Center, conference center participants will be able to easily walk to nearby shops and restaurants, enhancing the economic benefit for the community as outside money is spent locally. And because Town Center itself will be an attractive destination in Homer, a Town Center location will be a “plus” in marketing the conference center.

o Town Center development has the potential to greatly enhance Homer’s economic growth. A conference center could serve as a “civic anchor” in Town Center, helping bring people to the area and encouraging further development.

· The steering committee recommends that the conference center project, which has been in the City of Homer Capital Improvement Plan for the last two years, be identified as one of the most important projects for funding on future CIP lists.

· The committee urges the Mayor and Council to consider the possibility that borough voters will approve a 4% “transient accommodations tax” (often referred to as a bed tax) in October, and likewise consider the provision that allows the borough to enter into cooperative agreements with cities to promote tourism using funds generated by this tax. If a tax is imposed, Homer should try to secure as much of the revenue as possible. It seems reasonable to expect that the borough would view favorably a proposal from Homer to use bed tax revenues to support operation of a conference center.

It is not necessary for the City of Homer to expend additional funds at this time to move the conference center idea forward. However, we recommend that the City administration be encouraged to pursue ideas and discussions that will increase the likelihood of a conference center being built in Homer.

RECOMMENDATION: Approve Resolution 05___ supporting efforts to encourage the construction of a conference center in Homer.