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Fairgrounds arena fees defray city costs

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Last week, I was chatting with a pair of constituents who are regular users of the arena at the Alex T. Duffy Fairgrounds and very familiar with hockey. We were talking about how best to charge for the varied types of events held at the fairgrounds.

On the issue of last year’s “Arena-gate” scandal, one of the constituents told me she and others had known for years of accounting irregularities, including uncashed checks and unbilled services.

The message is that City Council was among the last to learn in the spring of 2011, when we ordered an independent audit, sparking a series of startling revelations.

Under new procedures and a tough-as-nails, new Department of Parks and Recreation superintendent, much has been cleaned up and what’s supposed to be paid for under city code is being paid for.

Unresolved is the more philosophical issue of what the taxpayers should spend in support of third-party entities renting facilities for commercial ventures.

I will start by stipulating that for the most part concerts and other events carry with them a cultural and entertainment value, as well as some economic spin-off.

I concede the promoters have an obligation to themselves to contain costs, as that is how you increase profit. Some events also benefit laudable causes, although I think the city’s role of offering wide-ranging recreational programs and facilities is equally laudable.

Let’s look at events from a pragmatic, business perspective.

A major concert that carries a $70 ticket price likely has a budget approaching $400,000. Of your $70, some goes to the talent, some to the staging, lighting and sound folks, some to marketing, some to printing tickets, still more goes to any number of other expenses people don’t realize or care about when all they want is their favorite performer on stage.

One of the components of cost is the venue itself. There is the fixed asset, which is a public facility meant to be used for the public benefit. The city recognizes this and charges only nominal rents. (Renting the arena for a night costs about the same as booking a half-dozen rooms at the Hilton Garden Inn for a night.)

However, commercial events also leave the taxpayer with marginal costs normally borne by the event organizer.

Thousands of dollars in Electric Department overtime is sometimes needed to provide the special power needs of such an event. Part-time workers handle parking on fields and do the cleanup. Staff sets up chairs and provides other logistical support. All these marginal costs are as much a part of holding an event as paying the talent or printing the tickets.

For years, amidst a growing number of varied events, the city has and does view itself as a partner in events that benefit the community.

However, large commercial events have morphed into a business for some with alternative revenue streams such as alcohol revenues in the tens of thousands of dollars. Meanwhile, the city was generating only token revenues through intermittently collected fees.

In the evolving discussions on these issues I have gotten concession percentages eliminated, chair rentals are gone and no more will there be a dollar charge to park. I have maintained we should not have on the books fees we are not willing to collect.

Promoters clearly would like everything for free. We all would. However, these marginal costs above and beyond token rental fees are direct subsidies to the bottom line of whoever is making a profit from the event.

I, and others, have said the marginal costs need to be billed on a cost basis. Events not requiring the extra services would not pay.

The recently passed ordinance on fees is not precisely what I would have devised if I were absolute ruler. Striking concession percentages and parking fees needed quick action, and I supported that.

You can’t always reject the good in pursuit of the perfect.

Truth is the venue-related marginal costs of a concert, including parking and electricians, doesn’t amount to but 4 or 5 percent of a budget, or about $3 on a $70 ticket. The belief City Hall is trying to deny anyone their music through greed is specious indeed. Also, by ordinance City Council can exempt certain community events like a Bravo Italiano Fest from extra charges.

This council, especially Councilwoman Roxanne Burns, Councilman Jeffrey Smith and I, have sought improvements to the property. That led to a professional hockey team coming to Watertown and opening its season on Friday.

We treasure the major events only this facility can host and believe we are partners in helping provide them. That does not mean anyone with a thousand dollars to rent the arena can hold what they want and expect the people to incur marginal costs 10 to 20 times the rent.

My obligation is to the fiscal health of the city and to the people who elected me. That includes seeing that facilities are maintained, improved and viable.

Recently a citizen approached me and asked why I was punishing developmentally disabled children by my position on fees. After I explained the issue of marginal costs in the context of large commercial events, he changed his mind and said of course those should be billed and the city should have an accounting of sales and expenses for events we provide pro bono services to.

If the purpose of City Council action is to appropriate money to an organization, we can do that, as is done with the Community Action Planning Council, and the Jefferson County Historical Society.

If the council’s purpose is to run an effective recreation program in a businesslike manner, then true cost accounting and transparency are needed.

The writer is mayor of the city of Watertown.

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