HomeMy WebLinkAbout1987-11-16 Council Packet - Work Session, BicentennKenai City Council
Work Session
November 16, 1987
Kenai Bicentennial - 1991
CITY OF KENAI
„Od G?d Aril o f A"„
SID FIDA:AO KENAI, AWU f/411
Irm"HONEEq-TUS
NOTICE OF WORK SESSION
The Kenai City Council will be holding a work session on
Monday, November 16, 1987-at 6:00 PN in the Council
chambers. To be discussed:
1. Kenai Bicentennial - 1991
2. Establishment of Bicentennial Commission
The public is invited to attend and participate.
,Janet Whelan, CMC
City Clerk
DATED: November 7, 1987
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CITY OF KENAI
"old capital aj 4
218 ROALGO KENAI. AL"KA On"
TILWHON1283-MIS
NOTICE Or WORK SESSION
The Kenai city -council -will be holding awork-session an
Monday, November 16, 1987 at 6:00 PH in the Council
chambers. To be discussed:
1. Kenai Bicentennial - 1991
2. Establishment of Bicentennial Commission
The public is invited to attend and participate.
/.' �anet Whelan, CMC
City Clerk
DATED: November 7,, 1987
11
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Al )r---D a -
CITY 4F KENAI
„ad C;ayaW oj oQ4m4a„
210 FIDALOO KENAI, ALASKA 991111
TELEPHONE 283.7535
701 William J. Brighton
FROM: Charles A. Brown
SUBJECT: Convention Center
DATE: November 6, 1984
Attached is a workpaper estimating revenues relating to a Convention Center
(Community Center?). The assumptions upon which the numbers were based were not
developed by me, and I have no assurances that they are reasonable.
The primary assumptions ware:
1) We'd have 10 conventions of 350 people per year.
2) We'd have 15 conventions of 150 people per year.
3) All conventions last 3 days.. .
4) All attendants stay the full'3 days in Kenai,. and spend $150 per day in
Kenai.
perhaps a good question is: Where's the break—even point, given an annual
operating cost of $256,000 per year?
Let's assume that we have an average of 57.5 conventions per year, each with
200 people attending for 3 days, using 3 rooms each day. The ballroom is used
once in each convention. And, we have 52 miscellaneous rentals during the
year.
Room Rental by conventions: '
-
57.5 X $125 X 3 X 3
$ 64,688
Ballroom Rental:
28,750 I
57.5 X $500
b-'
Miscellaneous Rentals:
.:
52 X $125
500
6.500
L93
'
Total Rental
Sales Tax:
$150 X 3 X 57.5 X 200 X .03
_1555,250
Grand Total
23 5 84
I made the ame -assumptions about salsa tax (each
personspends $150-per day...__
in Kenai for 3 days).
{
This would indicate that, in order to break even,
we'd need a fairly large
--
;
convention more often than once each week.
ntal portion could be accounted for. Thera
Also, keep in•mind that only the rei
is no reasonable way to keep track of sales tax revenue
that could be generated.
..•cam,. 7 _
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(3)
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i�';ytati'j��t♦1t,:.0ti7i...ilif'+:y..�, '.t• '.t .f .,
• I, 'CONVENT ItON CENTER REVENUE
C* ;`� }�'.}!'I1pALLROOM$ ='5*$4000++5*$6000.r�
I ONS
AMOUNT
s ! 51000
J
u • a ! 5 SMALL CON
41
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^� �r 1`., , f ':, h'.1 �, i':'1>t. :r'l.!' Lr .f ir'i.': lii•r�'
q '•ih I
�`sL b ,Kfl<?�1' �,y/,t � 4.wI�..ff•'4.k�'2�' �.�,•t, 'S ;�<.: ft•. .;fL• :i•, ='if. .t, n>..1,;:.• U: �,1IJ,' t;'"`':,� '"'y�',fL- ck,t,. :: Y,� .". S•'�' f1:: 1 .25.iQO*fi25*3*2 .MFj�i': a. '�''.�.5t.''�.;:, •un'' JI., .��..'�. ;',".i..1 �....3i .: .1.1".�� _•'rs• i
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Ll'�TOTAL RENTALB 39, 750
' ;.y ,..; .�; .,1...�., „t"fit: "i•'k.t"�^; .l:``. '^r,: ±�i':.k:, .:��;..j :..�,i.�� '!� t. '. .;.; ;t �:y
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•L•Y{ari!�:i+�>��ftz:k;,4` •- ;@.::ra:�: sL•.. :,,•(jA ., : ,j8ALE8�,,!.•- ;''."r.`,''.:.e•_.fy:. ;:, •' .l:a,+, y�•,;'::f3.t'i'..t`:- . e•lF,,U•' . -.d.c}:.•.l. r-,•>.` ,.,r'�c' i?::�'i:' �q1.G�';tv;,.,,.-✓yp;'.,'r"'.� '1._gi:n�:'}•l,��y�;j !'
: f.
,;c"•hl0"LAAGE CONVENTIONS (350) `' .•: :
r 47, 250
DAYS, ''# 150/DAY, 3'/.
h: ;y ':'• �..-•� ,p.jit{ �:,,,,;:: a: I
- - •'., t.n >i'se a.J•l!: � ! '%AT:• F.•' �' : M.1i�yJ'y. r..�l f.a! ,>:' +�;j`.«:' ,
h 1'.� l:. 1;'t' R• �, �(' tt',:`r., 1. /.1,'.Yj i :'i'; ! .t
�. •H,+a.'.rF •' %..r' :..t ;rv'1 r;+ tS 'tY : '�. �` 2t � � ;'�rl.a .'a t' a�i'l.:r };J'�;'.:J '.�, •S-�,���• g,: !.-. - c_
NVENT IONS `�y18 ) ' sx �,,, .<.r i.,;.t''-. JJ ;: "; Y :••I?:\ Rs:•:J:a ': Ir•;: , ,•�,
"MRLL..CO - r '•`!tLK .i'ts�S,v ri +I�V3�.:( pp�'r;.; •ii,'.(t?xti '��r"�%)�r,iv'+..''t'rC f 'r r3Q. t ,•�ts ,`•fir}(yt!� ' 375�y ,tc,#.150/DAYS•3GYO
:., � ••J q ;
•i ,:Ijr, e n. i
SALES TAX .779625 : i•, zfQ:
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.. .. .. "• .ar"w►:,., .4.' t1". .{�' '.!:> ?� 't•iPi"'i1(:i).',f ,r,jll :,:C?ii'`jj:et.1;�''1t;°av'.]?f.!'+:,..,jav'7!��;�"fi`.:`�!••'.iYL'R'Pi'St`I •�,
l •M ry %��.;:.f'� 1 Yr:tio •:�::.. IA . � i � t`s .}.� .. Y•j ��".
•� �, • �.' : f,t•t+e .i :: ), ,t:;x. 1;: F'`;w fry . f C;•. 1 '7'iy'>. ::^.',rti,;,$:�;:.a ,.' r 't: 1j, �l•.••:
-fir .x^:,r i.rs;;; 1.
} �. �..,,• �:,.ar t', °.�:t;' � % � �,....:. �=.. r.117' 37$ . , 1• : 4 ,,. ky,k•" r•' '
<. fit! RAND `tT.QTAL:'r:� s.: Vt'•.>. ..:?- :<: t:.,...;...*�,..:.`..:,:, g ,�,.+': �, �.,
Cq !� �•y,t t{. ±k� 7§ s V 'i .tt� 'A „ L t: N,klk 1 :. I✓':� t i�! p
JI ^,/, ii 'h[� }<: :ikk fNs:r�d;rt `l+t� �:� �� f+ , r i} ' ;r•: :1:..` t �i,* w t is �r Y-a `" c.a: "' ; # L'S F r / Fa:, tJ • ".F.. l 5 ta�47{•y ;'.'J'i
• ; µ 4 a.: i�('�", (i/'�'��} `,.t;�i . 751/.-�*'. .nj .••:•.1;.6, 1.: :�i 11.�. • ' flt . l' .. .•� r ..<.. :R��''r���4t�.
i1 "�':A88UMPTIONSs ANNUALLY,. WE WOULD HAVE 10 LARGE CONVENTIONS (350 PEOPLE)
ea�t
�a•:;.u; CI`S1hRtthVEN'i'iS
OR `3:. DAYS.'L`AROE CONVENTIONS WILL'USE 3 MEETINO''ROOMS EACH
"DAY.';°:xr�
SMALI:�:CONVENTION8 WILL':"USE 2 :MEETING ROOMS EACH',DAY. ':'AL,L 'CONVENTIONS
EACH PER50N WILL gPSACCRO
ENMof DTHERF��3 DAYS IN KENAI, AND SPEND $150
PER DAY IN KENAI. w
"t "i, r'>iji:}Si: Lrg�Ri•<?�•Y,.>a::.,;,: .,,. ..., }i..
t {r f t,,hpEMARKBs `.:THE SALFm TAX REVENUE WILL.' BE RECORDED IN THE OENERAI: FUND. ;
' ; ,�'q?' •,, ;t:.;THEREFORT H ONLY ' THE RENTAL WILL ' BE A REVENUE � SOURCE TO THE -FACILITY.. -
WE momwow--y
$2569000 PER YEAR. BASED UPON THAT FIGURE, THE FACILITY WOULD
;'LOSE ABOUT $2169250 PER YEAR. EVEN IF WE COUNT THE SALES TAX REVENUE
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CITY OF KENAI
�,, . •opt e� 4" P t
. 210 FIDALOO KENAI, ALASKA •9611
TELEPHONE 283.7535
January 249 1985
Me. Sans Efird
Office of Management and Budget
State of Alaska
Pouch AM
Juneau, Alaska 99811
REs Kenai Community Center
Dear Me. Efirds
The City of Kenai has listed the Kenai Community Center as its
number one priority in its 1965-86 Capital Improvement Projects
Request for State Grants. I.
Please find enclosed s
1. Book entitled "City of Kenai•1985-86 Capital Improvement
Projects Requests for State Grants" and 5 copies of our
brochure.
2. Report entitled "Kenai Community Center Committee". l
3. Report entitled "Kenai Community Center Summary of Estimated
Annual Revenue and Expenditures".
-
4. Full set of construction pleas (see Page A3 for flnnr
a.
plans).
u
The City of Kenai is very excited about the future Kenai
Community Center. The City has requested $3,5009000 from the
We
State of Alaska for the construction of the community center.
have spent 'b1869000 for the architectural design of the building.
The City has also agreed to fund the purchase of the 5 acres of
$207,000. Therefore
land for the center which is estimated at
the City is participating in 10.1% of the total cost of the
project.
•..... ,. -
`
. _ .:.. --
- - -- - - -- - - - _ - - -- --- - - - - - c - !-self . Duc - -
We have determined that the Center will not pay f r i
--------------_-__------------..
that the Center will cost 5138,625 more then
• ,.. „ .
. , ,;,;
-_mt1m�t_es_1ndicste
the revenues it will take in. ----he City of Kenai Is willing -and --
able to subsidise the center. The Mayor and Council of the City
of Kenai have pledged their affirmative vote for the maintenance
and operational cost of the canter. The City pledges not to
r request additional funds for construction nor any future
i operating funds.
i
Sincerelyp
Wm. 31. Bright
City Manager
WJ6/dg
"I Enclosures
i
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KENAI COMMUNITY CENTER COMMITTEE
Mayor Tom Wagoner appointed a Kenai Community Center Committee on
November 30, 1983. Those appointed to the committee wares
Ran Malaton, Chairman
Louisa Miller
Connie Keevil
Tom Murphy
Penny Byer
Jim Carter
Jim Evanson
Leroy Heinrich
Lon Hals
Councilwoman Sally Bailie, ad hoc
The committee has held public hearings an the following dates:
February 29, 1984 March 14, 1984
April 12, 1964 May 1, 1984
May 179 1984 June 4, 1984
July 10, 1984 August 6, 1984
August 27# 1984 September 19, 1984
September 24, 1984 January St 1983
The committee has successfully followed a logical procedure in
accompliphing the following tasks:
1. Selected a Sites The committee and City Council has
designated a 5 acre site near the Senior Center overlooking
the Kenai River and Cook Inlet.
2. Determine the type of facility and what different functions
the center would provides It was determined that the center
Y
would be a multi-purposo facility with no special interest
-
groups. Below is a chart of group typesand different
raciiiftes,needed In tho proposed Community Center.
'COMMUNITY CONVENTION CULTURAL
Receptions Banquets - Max 500 Lobby
Banquets - 500 Max Meeting Rooms/storage Kitchen
Meeting rms/storaqo Multi -purpose space Museum/Secured
Multi-purpoee space Lobby Gallery/Secured
Lobby Kitchen Portable Staqe/
Kitchen Portable Stage/Lighting Lighting
Portable Stage/
Lighting
11 W
1
MANAGERIAL INCOME PRODUCING
f
Office Concessions
Storage Cloak Rooms
Maintenance Shop Vending Machines
Loading Platform
_
C loa'< Rooms
• -.
Toilets
f
Ticket Office
Pay Phones {
Mechanics Room
;. etermine the number of people needed
Study user groups and d
to accommodate.
•'
�
a. Study the plans of other community centers and visit and I
analyze in depth the following centers:
Centennial Building - Sitks
Egan Center - Anchorage
Valdez Convention Center -Valdez
Centennial Hall - Juneau
9. In depth study of operating a community center: The
committee discussed in depth:
1
Operating costs - revenue vs* expenditures j
uses ,
Justification and exploration of
nationwide
organizations
Lists of prospective usevenQnlorofitstate ocgan
P
i;
City use, commercial use ,
Repair and maintenance coats - upkeep
Types of services provided
-
Rates and payments I
Reservation and deposit methods
Kitchen and catering operations
I,
Rules and regulationa
I'
Days and hours of operation take down services E
Janitorial --cleaning an4 setup
Concession services i
and contractual agreements with users
.•,.
�.S
Legal requirements
Advertising, promoting and notices
Records and audits
Bonds and insurance
Permits, licenses and taxes
-
6. Outline what is wanted with architect and commission
architect for Schematic design of center.
_.
approve schematic desiq n ..and-commise-coned s_ar�►eM
7. Review and Kluge to design ca
_.:..;
ith William
in association wn
-_-__GInt_o-Li
with ar
Review prel�eiatahaltla3sdividablohtoe6tmeetingirooms, amain
dividable g
and three smaller gallery areas, storage areas, ceetr
landscaping, parking,
warm-up dressing room, manager's area,'
�i
Lfr
KENAI COMMUNITY CENTER
SUMMARY OF ESTIMATED ANNUAL REVENUE & EXPENDITURES
..
ESTIMATED ANNUAL REVENUE (INCOME)
Meeting room rentals
i
22,500
11,000
-
Great hall rental
Misc. rental, concessions, cloak room, vendors
6,250
'-
Subtotal
S 39,750
::...
'.
*Additional sales tax est.
779625
`
Total estimated annual revenue
117 7
ESTIMATED ANNUAL EXPENDITURE (EXPENSE)
Salaries and benefits (Manager, secretary, 2-1/2)
$179,000
:__....__ ......- ..
Utilities$
18,000
-
Electrical
6,000
Gas
S00
_
Refuse
S00
Water and Sewer
2,000
Telephone
20,000
!
Janitorial
5,000
Transportation
5,000
Promotion
20.000
Supplies & Misc.
----•
56 00
'>
*Total Revenue $117,375
+
Total Expenditure $256+000
'
*Difference $-1389625
i
:; ..
*NOTE: Per City -ordinance, sales tax torecorded GenereT Fund
be directlyidentified with the
-
-- Revenue and ther�fo_ro_will not
Community Center.
7
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type of construction and exterior deeigndencefloor decorating, a worming kitchen facility, { "7f
platform, Furniture, etc.
g, Setting up criteria for a planned development of City land
adjacent to the center to enhance and be compatible with the
cent er a I`
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of �
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§[JBSTITUTE
Suggested By: Legal Department
CITY OF KENAI
ORDINANCE 1139-87
AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA,
AMENDING THE KENAI MUNICIPAL CODE TITLE 1 WITH THE ADDITION OF
CHAPTER 1.59 ENTITLED "KENAI ADVISORY BICENTENNIAL COMMISSION"
AND AMENDING KMC 1.90.060.
WHEREAS,•it has been determined that there is a need for a Kenai
Advisory Bicentennial Commission to plan and coordinate the -
preservation and development of significant areas of the City's
history; and,
WHEREAS, 1991 will mark the Bicentennial of the City of Kenai;
and,
WHEREAS, this Commission will also be assigned the task of
preparing for a celebration of this event; and,
WHEREAS, the Council desires this Commission to be exempt from
the residency requirement for commissions, committees and boards,
as set forth in KMC 1.90.030, due to the area -aide interest and
importance of Kenai's Bicentennial.
NOW THEREFORE BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI,
ALASKA, that the Kenai Municipal Code be amended as follows:
§Section 1:
That Title 1 of the Kenai Municipal Code be amended by the
addition of Chapter 1.59 entitled "Kenai Advisory Bicentennial
Commission," and enacted in its,entirety as shown.i.n Exhibit "'V"
L
1]
PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 18th day
of November, 1987.
JOHN J. WILLIANS, MAYOR
ATTEST:
Janet Whelan, City Clerk
First Reading: October 21, 1987
Second Reading; November 4, 1987
Third Reading: November 18, 1987
Effective Date: December 18, 1987
5
1,
.i
'f
if
section 1:
L.
Chaipter 1.59
ADVISORY BICENTENNIAL COMMISSION
1 59,010
Dutie,- and Posters.
1
-
1.59.020
Qualifications.
utie d o ers: The Commission
shall be 1
re uired to do
L� Develop
theSOIA213-SEL
ado t aiter� or revise
subiect to anprovai by 4
of
_
ti ;+
the City Council
and �tithin ninet 90 d
s o establis meat
Goals and ODWSM .yes Plan
for the celebratio
,.
Commiasion�
a
in 1991.
of the Bicentennial
of the City of enai
Council, uron apnrova
;t
b S bmit
to t}�e City Mana er aDd
' therea ter, an not
Objectives Pien an
f{
of the Goals and
190) days prior to the beginning
of the budget
less t a ainetj
improvements,
which_in the
t:
year• n list of
recommended capital
or desira le to_be j
ar_e_ necessary
-
oppinioO, of the
constructed for
LeL Es_tabiish
Bicentennial
Commies ion,
the celebration of the Kenai
Bicentennial
Eacets._of t e
statherin of cultural
as recommended i4
subcommittees_ to to
lands, finances, structures,
in
data. and any other subcommittees
?�
and historical
jn the Goals and
(d) Research
grants_from Federal,
Objectives Plan. ro
ari vrocur0 wtith _�pD
_y al of Council, related
other sources that
Bicentennial
State, private, or any
-. ,„
may: boco e_ avail�bie
to promote the Kenai
.
r:.
�..59r 020
a ii cations: a The
Commission•members are
i�
tsnecificnii�xemvte rom a residency
rectuirementa as state
iri KMC i.90.030.
All other requirements. duties,
-
terms, and nroceedinQs
'
are as stated
in KMC_1.90.
4I
I
}
I/
pection 2:
1.90.060 Specific Requirements of Boards,, CO ��aZid
Committees: [SPECIFIC DUTIES AND POWERS OF THE LIBRARY
COMMISSION, HARBOR COMMISSION, PLANNING & ZONING COMMISSION,
RECREATION COMMISSION, AND LANDSCAPING/SITE PLAN REVIEW BOARD AS
DEFINED IN SECTIONS 1.57. 11.10, 14.05, AND 19.05, WILL REMAIN IN
EFFECT. CREATION, QUALIFICATIONS, TERMS AND PROCEEDINGS FOR
THESE FIVE COMMISSIONS WILL BE AS STATED IN -THIS SECTION ON
PROCEDURES.] Reguirements of boards, conun�,esioins and committees
. _
IOIJOPT@O Ly Lajn elkT.naarm wasa�._ �, a •••• ••••••
reau iremanteAound in code sections -specifically s�ertainil}Q to
individual boards, commissions An committees.
i
CITY OF KENAI
%Od OapdW 4 4"
' ' � a�o�no�eo IfNNAl,auie�u► nm
_. _ TlI.WII0N!!q•7ili
CITY OF KEMAI
1988 - 89 CAPITAL IMPROVEMENT PROJECT
FRIGUNsTs
FOR STATZ GRANTS
ROAD PROJECTS
The
following road projects ($3,355,000) are the City of
Kenai's
top
priorities and we are asking the Governor to include
them in
the
Governor's Capital improvement Budget.
1.
VIP Subdivision - VIP/Lora Drive/Watergate/
Retch St. - Loop (Strip Paving) $1,000,000
2.
Trading Bap (Drainage - Curbs A Gutters)
250,000
3.
Swires - Spur to School (Strip paving) and
School to Lawton (loop)(gravei)
330,000
4,
Old Town - Upland, Highland, and Cook (Paving 6
includes some water and sewer)
550,000
S.
Linwood, Candlelight, Kaknu, Lawton, Baker,
Kiana (Paving)
$50,000
6.
East Aliak and Highbush (Paving)
375,000
t�•. The
following road projects • ar e. a continuatiou of . • the
W-tg c9
Kenai's top priorities and we 'are asking the Alaska
State
Legislature to not only support the above requests but
also the
projects listed below.
7.
Kiana, Colonial, Steelhead & Kulilia (Gravel &
450,000
includes some water and sewer)
S.
ist, and and 3rd (East of Forest) (Gravel)
300,000
9.
N. Spruce, Second, and Third (Paving and
includes some water and sewer)
9000000
10:
HEM -Haller, Evergreen, McRiniey, N. Gill, and,
3rd, and 4th (Paving) 11100,000
-1-
-..r111YYriax�r>.:;r....,,,:.�a=rcc�.u. +aa�.fi.,..�.;.; .a,-a:::�,.ir".t..,.:c•_�,- ...,, ... _ r �,.^.u�ii�tel�:;�.i:�.�1�it't1�`ww '.,�'�',.`iYa';`z:�_.:iGwwvaa._-� : �'�.�9
a
HEALTH AND SAFETY PROJECTS
The following projects are to be considered of health
and safety
Importance:
�,. Street Lights $ 100,000
2, Fire Truck 840,000
-- -- - -
STATE
i. Traffic Signal - Spur & Airport Way
E
E -
2. Traffic Signal - Spur & Forest Dr.
3. Traffic Signal -Spur &Main 8t.
4. Wildwood (Spur to State Prison) - Paving & Waterline
i.
GENERAL PROJECTS
to Data Bank, Economic Development Committee
$ 50,000
2. Bicentennial Project
41000,000
Community Center
3. Recreation Facility Development
500,000 j
Little League $1y5,000
200,000
R/Y Park
Softball Fields (parking, etc.) 125,000
•
i
'q.,• Enlarge the ltenai Harbor Facility
$1,250,000
R
.s,
r -
r
-2-
_:....
DEPT\PWDIR\CIP.LST
a
,
X
F
it
p
i
is e
Lfi � t6� �j
4.fr>91'J��d
�J df Itz. 4
8•�vr,,, _�:t'at1 a. ......� �:y),-a �.: c.. ... r/{:...���u:'k*. '. ,YI�'JI`M�IMS!'i�.4t`'t :'li,�<I.+•- V.1,'.�
t
Economics Research Associates
W 9
QUARTERLY REVIE
E.
wIWTER 1987
IN THIS ISSUE...
• ERA ANNOUNCES
FORMATION OF UNDER'
WATER WORLD COMPANY
- — Partnership formed to
develop and manage an
innovative, exciting
aquarium attraction.
s.
s
l
,i
�i
y
3
t
• ERA AND PIER 39TO
DEVELOP UNDERWATER
WORLD IN SAN FRANCISCO
ERA, Ouatar of New
Zealand and Pier 39 to seek
approvals for development
of Underwater World in
San Francisco.
• TOURISM INDUSTRY
OVERBUILT OR OUT OF
BALANCE?
Bringing the tourism
industry back into balance.
Achieving economic
efficiency is the key.
• THE CHANGING ECONOMICS
OF GOLF
Positive economic and
demographic trends bode
well for rebounding golf
Industry.
INTERNATIONAL RESORT
AND RECREATION
DEVELOPMENT
The risks can be managed.
A few clues to solving the
mystery of overseas
development.
• TURNING PLANS INTO
PROJECTS. ECONOMICS
-RESEARCH ASSOCIATES
DEVELOPMENT SERVICES
ERA establishes subsidiary
organization to aid In
implementation of projects.
L
ERA ANNOUNCES FORMATION PNY
UNDERWATER WORLD
Have you ever studied the under-
acrylic tunnel. The nearly 400•foot-
travels through large
side of a free swimming shark, or a
the colorful reef fish
long tunnel
tanks containing sharks, reef fish,
Manta Ray, or
Chances are that even if
surf dwellers, and other aquatic life.
of Hawaii?
you are a diver, the opportunities
Besides the sheer length of the
are several other de -
are fairly rare.
Economics Research Associates
tunnel, there
sign elements which enhance the
it far
(ERA) and ouester Corporation of
visitor experience to make
(ew sher tunnel
announced Wo Id
New Zealand recently Underwater
formation of Under
viewing systems that have been
the
Company to develop and manage a
I
developed.
new concept in aquarium attrac-
-
. -The tunnel- W-a long -curved. - - - -
t ions.
Patterned after the highly suc•
closed loop system rather than i
in
cessful Kelly-Tariton's- Underwater -
- the -relatively- short.- straight._
that have previ• i
World in Auckland, the attraction
and out systems
offers visitors a ,journey Under the
ously been developed.
Sea" to observeunderwater inhabi•
wExrPAGEI
tants from inside a transparent
L
RECREATION
UUNDERWATER WORLD CONTINUEO)
• A curved system projects a true
underwater feeling and a sense of
mystery and excitement.
• The combination of a moving
walkway with a stationary plat-
form allows visitors to stop and
examine activities of particular
interest.
• Visitors can repeat their trips
around the loop as many times
as desired. Most go around at
least three times and discover
something new on each trip.
• The acrylic sections are joined
by special techniques that pro-
vide a nearly seamless bond
which does not interfere with
the underwater illusion.
• The facility makes money. The
Auckland attraction is currently
running an operating margin of
around 50 percent.
• It is a very efficient use of land
(less than 1 acre►.
The time required to go through
the 390-foot tunnel is 10 minutes if
a visitor remains on the moving
footpath. Since nearly everybody
moves on and off the footpath sev-
eral times, it generally takes 15 to
20 minutes to complete the loop.
Total length of stay in the attrac-
tion is targeted at just under 1 hour.
The original Underwater World
in Auckland drew 1 million atten-
dees in the first 15 months of oper-
ation (this in a city with only 1 mil-
lion population and about 500,000
tourists).
These characteristics of Under-
water World -make It- an economic
ally successful stand-alone attrac.
- tion, although -ERA- feels that its
greatest potential will be as an enter-
tainment component of large mixed
use projects and shopping com-
plexes. The demonstrated ability
of Underwater World to attract resi•
dents, tourists, school groups, and
social/convention activities can be
a major factor in establishing the
identity of new projects or revital-
izing existing investments.
Underwater World Company has
the ability to develop two to three
facilities per year. Due to the in-
credibly enthusiastic response we
have received from the developers
who have reviewed the attraction,
Underwater World projects will be
scheduled on a priority basis with
geographic exclusivity being pro-
vided. Options are available for
those who wish to reserve rights to
the attraction in a specific geo-
graphic area.
"AS an aquarium without walla,
Underwater World is more visually
appealing and entertaining than
any other aquarium attraction
ERA has Investigated."
This is the first time in over 27
years -and 8,000 consulting assign-
ments that ERA has put its name
- on -an -attraction or real estate prod-
uct. We think it's a winner. For
persons interested in this attraction,
contact Clive Jones in ERA's San
Francisco office.
ERA AND PIER 39 TO DEVELOP
UNDERWATER WORLD IN
SAN FRANCISCO
Economics Research Associates,
Questar of New Zealand and Pier 39
Limited Partnership have announced
their intention to seek approvals to
build Underwater World at Pier 39
in San Francisco.
Specific designs are being devel-
oped for the 30,000•square-foot
building to be constructed at Pier
39's bulkhead overlooking the
marina adjacent to Pier 35.
The participants plan to formally
present the project to the Port of
San Francisco in spring of 1987.
Groundbreaking is slated for sum•
mer of 1987 and Underwater World
is scheduled to open a year later.
"We are pleased to have the priv-
ilege of introducing this- exciting,
educational marine life project to
the waterfront. We believe it will
substantially heighten awareness of
the environment and ecology of the
waters of our bay and off our coast,"
said Pier-39-President Fritz Arko..
"Informal review by various city
officials -and community organiza-
tions indicates great acceptance of
the Underwater World at Pier 39
and we look forward to presenting
the project for formal approval."
L
MAI I -all
RECREATION
MINN
TOURISM INDUSTRY ---OVERBUILT OR OUT OF BALANCE?
ay Clive a. Jones
The refrain "everything and every
vanou �"`""aOMT saua
market is overbuilt" echoes through
ILI
the increasingly deserted halls of
^10VAL0
developers and financial institutions.
N " ",,,� aua
`CONO""`
vis^OR
What does "overbuilt" mean? Most
._txMrsir WSllow wvra
"yM
rM/►OYMr"r
- -
of us in the real estate and tourism
industry think of overbuilding as
excess office apace or too many
GRoWWO
hotel rooms, However, overbuild-
ing or excess capacity can relate to
VA
COWOM u�noYM[wr
attractions, convention facilities,
W r C
E WAV u,v�orMnrt
airports, or any other tourism
product. service or support require-
was.roR
WDUSSUY
- t
ment.
In most cases, rather than being
ac"rbr
overbuilt. the tourism industry is
DUBUC
p,�Mw EVAOYMM"r
tcc"owt
IMVAO
"°"'BASIC
rMv1CYMt"r
`.
out of balance. Some elements of
the tourism system are too large in
OVERVIEW OF VISITOR IMPACT
MODEL
terms of:
. The number of visitors needed to
The private resort developer
as an economic unit. There is e
Y'
support them, or
spends much of his time refining
need to recognize the system inter-
. The economic strain they put on
this mix to improve the efficiency
relationship so that preferred devel-
other segments of the industry.
of the economic unit.
opments (new attractions or an ex-
Over the last several years, the
panded convention center to add
investment driven market focused
i
'There Jaaneed /orgreaier�wer�•
among planners of fourism as
hotel room support) or marketing
'
n hotel and retail development
ness
an economic system In which
support (visitor bureau funding)
with very little recognition of the
attractions, accommodations, sup •
can be given encouragement and
need to balance this with pro•
port services and marketing are
development priority.
grammed improvements to the
kept in balance."
Achieving economic efficiency in
tourism product. Today's develop-
ment opportunity (requirement) is
A tourism destination or city has
a tourism destination requires great -
of
to expand the capacity and appeal
the responsibility to maintain the
efficiency of its tourism
er planning and coordination
tourism investment decisions. Dest-
_ -
of the product so that balance it
economic
industry, but since decision making
inations need to develop a full un-
- - - - -
regained.
ERA assists master planned resort
is decentralized, it usually does not
derotanding of their tourism system
and objectively assess
'
end tourism destinations in the
have the authority to maintain eco-
balance among tourism re-
economics
the quality of the tourism product.
; ;
�.
develooment of balanced tourism
systems and an efficient economic
nomic
sources. Industry investments can
(ERA is currently conducting such
for San Francisco.) With
'
unit, which is composed of the scale
often be destructive competitively,
that is, after the same market
an analysis
this understanding, they can develop
and nature of the attractions
!convention center, theme_
going
segments,. instead of working to-
the mechanisms to interpret system
::.
--casino,
park, resort beach, etc.), number of
gather to achieve an efficient eco--
effects when making development
decisions This provides
_rooms~ number and type of r�steu•
nomic unit. Like the master
project, a tourism destine.;-
and policy
the ��ieans to both Smoot out over -
rants, shopping, entertainment and
planned
must evaluate the structure of
building cycles and encourage eeo•
"
recreation, parking, and market
tion
its tourism system and recognize it
nomfcally beneficial development.
.
expenditures.
L
I
r
�T
RECREATION
THE CHANGING ECONOMICS OF GOLF
By J. Richard McElyea and Gone A Krekorlan
Table 1
NUMDER OF GOLFERS WELTED TO INCREASE
GOLF
NUMBER OF
DEMAND
GOLFERS
PERCENT
(Millions
PERCENT
YEAR
(Millions)
INCREASE
of Rounds)
INCREASE
1985
1990
48.1
49.1
—
5.5%
440
466
5.9%
1995
19.9
4.2%
494
5.4%
Golf courses have traditionally
been treated as "loss leaders" by
the real estate and resort industry.
They have been regarded as neces-
sary but very costly amenities. Re-
sort and community developers were
satisfied with a breakeven golf
course operation if they generated
real estate sales or higher room rates
and occupancy. This attitude is
changing due to increasingly favor-
able demographics, growing rave•
nues from greens and cart rental fees
and improved golf course manage•
ment. in our opinion, these three
factors will improve the economics
of golf significantly.
INCREASINGLY FAVORABLE
DEMOGRAPHICS
Growth in golf play has not been
helped by the "baby boom" genera-
tion; play was very sluggish in the
19709. However, as this segment of
the market moves into the 36- to
55-year-old age bracket — the group
which has the highest golf participa•
tion rate —and growth occurs in
the 65+ population — the group
exhibiting the highest per capita
play —golf is expected to benefit
greltly.
Assuming that golf properties
and frequency of play patterns re-
main essentially unchanged, the
number of golfers is expected to
Increase by 5.6 percent between
1986 and 1990, and an additional
4.2 percent between 1990 and
1995. But because of population
aging, golf demand (number of
rounds) is expected to increase at
a faster rate than the number of
Table 2
INCREASING REVENUES FROM GREENS FEES AND CARTS
AVERAGE ANNUAL PERCENT
AVERAGE ANNUAL
INCREASE
IN GREENS FEES
INCREASE IN
PERIOD_ UNICI A
if E E O
THE U.S. CPI
1979-1983- -67. ---
-8%--- - - 7% -
-- - -9'ti - -
1984-1986 12'/i
M 15%
4'/.
golfers. Moreover, with a growing
retirement population, golf demand
during midweek periods should also
increase at an accelerated rate.
Based on this growth forecast, we
expect an average of 125 to 150
new courses to be developed annu-
ally over the next five to ten years
compared to the total average of
about 100 courses developed over
the past five years.
GROWING REVENUE FROM
GREENS AND CART FEES
During the past three years, both
greens and cart rental fees have esca•
lated more rapidly than most other
items in the national economy. Put
another way, there has been lim-
ited resistance to increases in greens
fees and cart rentals, at least at
privately owned daily fee and resort
courses.
An important corollary trend Is
toward the mandatory use of golf
carts, particularly at the more expen-
sive courses and resorts. A few mu-
nicipal courses also demand the use
of carts during peak periods. Al-
though the primary reason given for
demanding the use of carts is to
speed up play, economics are an
extremely important part of this
decision: cart rentals are very prof-
itable. The addition of a cart fee
can increase the gross revenue per
round anywhere from 20 to 60
percent. Increase in cart usage
from 30 to 50 percent of the play-
ers improves the bottom line j
dramatically.
IMPROVED GOLF COURSE
MANAGEMENT 6 MARKETING 1
— The -golf -course-businesses one ---
of very high fixed costs, particularly
(NEXT PAGE) j
L
-1
(GOLF CONrINVED)
,we expect an average of 126 to
160 new courses to be developed
annually over the next five to ten
years compared to the total aver-
age of about 100coursesdeveloped
over the past five years. "
course maintenance. Once the f ixed
costs are covered, a large portion of
the additional revenue drops to the
bottom line, making the importance
of good management and marketing
} clear. A number of firms have rec-
... _ - -- ognized the profit potential from
the business of good golf course
management. These firms now
r
RECREATION
Table 3
INCREASE IN CART USAGE
ANNUAL6M2UNt(1000)
WI N �
WITH 40x
MAIM Sox
56 T USAGE
CART P-121
MOM
GREENS FEES
$600
$600
$600
CARTS
170
225
285
CONCESSION REVENUES•
_.70
_J2
._m
SUBTOTAL
$640
$895
$945
LESS
COURSE OPERATING EXPENSES
1500
$500
$300
CART EXPENSES
100
140
120
ALLOTHEREXPENSES
—0
-is
_W
SUBTOTAL
$750
$760
$770
NEf OPERATING INCOME
S 90
$105
$475
.
have contracts with many public
agencies and private developers to
.
manage their courses. By way of
The old rules of thumb such as
$60 per round, as is the case at
example, our studies have shown
$50,000 to $100,000 per hole for
most Hawaiian resorts, the gross
that a municipal course can gener•
construction cost and S15,000 to
income can jump above $2 mil -
ally earn S75,000 to $160,000
$20,000 per hole for annual main-
lion. After deducting a generous
more annually from the lease of a
tenance simply do not apply any
$600,000 for maintenance and
golf course to a private operator
more. New high quality golf
$200,000 to $300,000 for general
d
than from a course under public
courses that cost in the range of
and administrative and pro shop
operation.
$4 to $6 million are not unusual
expenses, a net of $500,000 to
Many golf course managers are
($223,000 to $275,000 per hole),
$1 million is achievable. I
now considering initiating policies
nor are annual maintenance costs
A dramatic example of the value
y
that not only encourage but actu•
in the $460,000 to $550,000 range
of resort operations is Pebble Beach.
ally force faster play. A few courses
($25,000 to $30,000 per hole) for
Pebble Beach was sold in the late
require golfers to make the "turn"
courses operated year-round.
1970s for approximately $75 mil•
within two and a half hours, inform.
RESORTS
lion. The primary value of Pebble
ing the golfers on the first nine of
Beach was perceived to be the real
_
their expected completion time.
p
Resorts have been, and are likely
estate potential of the property.
Golfers are not allowed to continue
to continue to be, the major bone.
This situation has been reversed.
k
play in the back nine if they fail to
ficiaries of the improving econom•
The resort operations of Pebble
t -
achieve their time target. Ensuring
ge
ics of golf.
Beach alone produce sufficient rev.
Cs
a five•hour round increases capacity
To illustrate the potential from
enue to support the original selling
by as much as 10 percent, particu-
golf course operations, let's take a
price without considering the addl-
f
lady on municipal courses. Again,
resort golf course that achieves an
tional land and inventory. As resort
-----------------------------=- -
.
-with-the fixed costs of increas•
-average- of- 40,000 rounds -of play
operations -were becoming increaa._--
ing play and revenue by 10 percent
per year and has an average fee of
ingly strong, environmental pres•
dramatically improves -the- bottom-
-$35 (including cart), this- produces--
--sures and -slow growth factors made - - -- - - --- ---- - -- --- -
Iine performance.
gross revenue of $1.4 million. At
the real estate potential in the Del
As golf course profits continue
to climb so, unfortunately, dodevel-
50,000 rounds, the gross revenue
increases to over $1.7 million. If
Monte Forest much more difficult
to achieve, further increasing the
bl t h r to
value of successful resort operations.
opment and maintenance costs. the resort �s a e o c a ge up
Exempted from Urban Land USOJIMe.
t
RECREATION -
INTERNATIONAL RESORT AND RECREATION DEVELOPMENT
THE RISKS CAN DE MANAGED
Many companies are reluctant to
move across national boundaries to
develop resort and recreation prop-
erties. They have concerns about
lack of market knowledge, tax laws,
and other issues. However, expert
ence indicates that with appropriate
planning, recreation development
opportunities can be identified and
market niches developed for growth
and diversity. Projected increases
in leisure expenditures in many
countries are impressive. For exam -
pie, see the data on British leisure
in Figure 1. Thus, the effort to
penetrate a foreign market can be
worth while in terms of financial
returns and is not as complex as
generally believed. Outlined below
.
is a simplified list of the basic con•
}
siderations for resort and recreation
development on an international
}
4
level.
• Concepts. Whether the proposed
development is a resort or theme
park or water park or other attrac-
tion, it is critical to determine if the
i
concept will transfer to the foreign
culture. The primary technique to
provide this test is the focus group,
�- -
which can be used to determine
local reaction to pricing, theming,
'- - -
!'
image, operating mode, and other
factors.
p..•
• Site Selection. One of the most
.;
publicized and comprehensive site
selections was recently undertaken
by the Disney Company which even•
-_ ------=----- -- ;
tually- -selected a 4,OMacre- site .
outside of Paris for its European
- -r--=---- -- �- - - _ -----------Disneyland.
- Many -companies have -
learned that a theoretical "best site"
-
is not always available, but a work•
able site which can be assembled
sy Thomas A. Feeney
and is politically acceptable is more
appealing. As part of this process
in an international project, care
must be taken to verify information
regarding the site. For example, it
is common for off -site infrastruc•
ture plans in some countries to be
published on an informal basis.
. Pricing. One of the most difficult
issues faced by International recrea-
tion developments is pricing. Per-
haps most effected are hotels which
may be familiar with the European
Plan and then must work in an envi-
ronment where full pension is the
standard. It is important to under-
stand how the full pension plan can
affect operating statements and
food and beverage revenues. Simi•
INEXr PAGEI
Figure Z
CURRENCY EXCHANGE
AGAINST U.S. DOLLAR INDEX
110
loo
M1
SWITZERIAND
90
am
IM
AUSTRA
80
GpRMANY
Ppr
49
VAJ
70Ema
ENGLAND
�a
""CE
60
MEN
ITALY
soME
SPAIN
40
-
_
4979 4980 1981 1982 1980 49" 1985 4986
touruaanunw�/woaaa
�iiiiirii
L
i
I
i
-i
I
- - - - RECREATION -
FAVERAGE
Figure 3
FIGURES FORMANUFACTURING WORKERS
ANNTOF
WOLHOM M
F N
DAYSTAKEN
PUDUC
HOLIDAYS
TOTAL
VACA ON$
0984)
(1982)
(1982)
KOLIDAYs
ADIIOAD
JAPAN 4,/80
9.6
18.4
27.7
N!A
DWAN 1.944
22.8
&0
00.5
05%
UNITED STATES 1,904
49.3
9.4
28.6
NIA
WWC,,VWANY 1,652
00.9
10.6
40.8
60%
D{,sHM 4,649
45.0
10.0
35.0
46%
so�.oh+apan.»Mw�naloeor. �veeawatten+nwYon
country. It is advisable to use a
construction or project management
firm with international experience.
• Financing. The customary terms
of financing will vary by country.
In Europe, for example, theamount
of debt which is typically allowed
on a development is lower than in
the United States. However, the
use of guarantees rather than cash
equity is more common.
Factors which are I
most likely to affect financial re-
turns include depreciation sched-
ules, treatment of capital gains,
property tax rules, and taxes on non.
residents. Most developed countries
h e tax treaties among themselves;
mom
IResoor a RECREAT•JON coNrmuEol
dance is expected prior to reaching
however, the terms of these treaties
larly, recreation attractions may
a stabilized level, which enables the
can vary widely and should be in.
need to initiate two-tier pricing or
market to become familiar with the
vestigated prior to establishing the
season passes, or some form of die-
concept. In addition, the patterns
development entity.
count to accommodate a local pop-
of attendance may vary dramatic•
ulation with a more modest income
ally. For example, in southern
•Government Support. It is ex-
! level than the tourist population.
Spain it is traditional for families to
tremely valuable to have a local
go out late in the evening, and the
staff or sponsor who can represent
• Inflation, of course, affects proj•
dinner hour also occurs very late,
a project to the local government.
ects even in one's own country, but
which extends the hours of opera•
This may require a joint venture
,{
becomes more complex when deal-
tion for an attraction. Further•
partner in the host country to avoid
ing in an international market. In-
more, there are significant differ-
costly misunderstandings. Most
flation can directly affect the ex-
ences in the amount of vacation
governments have programs to sub*
change rate of the host country and
time available in various national
sidize industries they are seeking to
j
therefore affect both the appeal of
markets, as documented in Figure 3.
develop. In southern Italy (Mezzo- i
i
a recreation project to the Interna•
tional market and a nonresident's
•Management. For a nonresident
giorno) there are low interest loans
and grants; however, some of these j
t
development costs. During detailed
investor, professional managers are
Two important considera•
do not apply to the tourist sector
planning and pricing, both an infla•
a must,
tions the need for a selection
or apply only to certain classes of
- -
tion index and an exchange index
should be used to reflect the role-
are
process to compare the qualifi-ca
hotels.
_
1
tionships of these factors between
tions of various management com-
and the negotiation of the
ERA has been involved in hun•
f
the host country and the relevant
panies.
management contract which reflects
dreds of resort and recreation proj-
�
markets, Figure 2 shows the recent
dramatic change in the strength of
unique features of the local business
ects around the world and we be•
lieve that the risks inherent in these I
I
European currencies against the
environment.
developments can be analyzed and
---=--------------- -
U,5,-doltar. Such fluctuationscan -
- --
• Design/Costs. Oevetopment costs
managed. If this is done, and a- ---- . .. - -- --------- -- ----
be hedged by forward exchange
can be controlled by using the local
proper niche is established and ap•
-- - — —
design vocabulary -and materials.- to
proprlate localsupportisdeveloped,----------___---
'
• Attendance. When a new recrea•
Lion
addition, regardless of where the
design is developed, working draw-
these projects can produce attractive
rates of return and provide growth
concept is introduced any-
where, a period of buildup in atten•
ings should be produced in the local
and diversification for the sponsors.
La
�
RECREATION
.r,.
TURNING PLANS INTO PROJECTS
ECONOMICS RESEARCH ASSOCIATES DEVELOPMENT SERVICES
By Thomas A. Feeney
Many times even a well planned
development services and the.cost
is able to monitor front-end expen•
project runs into difficulty during
of these services can vary greatly.
ses and only pays full fees upon
Its implementation stages. In fact,
For example, using a general part•
successful completion of the assign•
many real estate projects are initi•
ner to obtain funds through a lime
ment.
ated by sponsors in the expectation
ited partnership offering could re-
Companies facing a difficult real
that others will participate during
quire giving away up to 60 percent
estate project or entering the real
implementation. However, in ERA's
of a project, while, on the other
estate development field or some
experience we have found one com•
hand, retaining an investment coun•
specialized aspect of it for the first
mon thread; all participants in the
selor to act as a finder may require
time may require outside skills- in
planning process are interested in
only 6 percent of equity raised.
the form of development services.
built projects. Often in the early
Offering these typesof development
ERA has established a subsidiary,
stages of a real estate development
services on a fee basis is a relatively
Economics Research Associates
an A&E firm will take the lead,
new phenomenon. Some firms
Development Services (ERADS),
only to find that critical compo•
work strictly on an hourly basis;
to provide this type of expertise to
nents such as operators, equity
however, this does not provide an
its clients. We expect the demand
partners, funding for predevelop•
incentive to perform, Probably the
for this service to increase dramatic•
ment expenses, or specialized skills
most effective payment mechanism
ally as the competitiveness of real
important to making the project
for these types of services is a basic
estate development and the com•
work are missing. Similarly, banks
fee plus a performance bonus. The
plexity of international financial
and S&Ls with problem real estate
basic fee (time and materials) covers
markets increases.
loans or land owners with limited
those services which provide imme-
For more information on ERAOS
development experience face diffi•
diate products for the project owner
and our development services for
culties in turning their plans into
such as a list of prospects, brochures,
real estate, please contact Thomas
projects.
and presentations. The performance
A.- Feeney, President, Economics
Selecting an equity partner is one
bonus, usually a percent of project
Research Associates Development
of the most challenging issues which
value, is paid upon successful close
Services, 1160 Battery Street, Suite
will come up during the implemen-
ing of a deal. This approach is most
350, San Francisco, California
tation process. Certainly such a
equitable to both aides. The owner
94111, (418) 966.0152.
partner must be compatible in terms
of mode of operation, personality,
and financial needs with the initial
per► Economics Research Associates
owners and investors. A long proc•
Conwhann In Real Estate b Recreation Economics,
ess can ensue in negotiating finan•
finance, Marketing, Planning b Management.
cial terms. Valuing the different
Los"Gan
SAN""CISCO
assets and determining when these
contributions will occur, as well as
Como,omme0d*10" 1s
10960Wilshire Wulevatd•Suite 2400
1/600•It•1ysINlLSuNe0S0
San Francisco, California 94141
valuing future returns to investors,
Los Angeles. California
tel•phon.t2+0)4».o5e5
iNephonet 1095"152
Tel xswroU0890
usually requires detailed financial
Wort 857661•►AX478.1950
SEATni CHICAGO
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projections and ongoing sensitivity
testing during the negotiation proc•
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vestors is to do the homework first
Tel•owen•(a17)OU-1900
_-- _- and -be_ preameed- to_ have_ answers
_ wASHIHOTOH, D.C.
- —5521 Old Counhouseflood.-Swn020
FT. tAUOtAOAtt
- - - amloN-0awardO . kWOS .. -- - --
during the negotiation process.
Vienna, Virginia 22180
Telephonet700691•1560
k Lauderdale. FIW 00,101
Teleph"(305)521.1105
The approaches to obtaining
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