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Bemidji City Council approves VenuWorks contract

VenuWorks is poised to operate the Bemidji Regional Event Center.

The Bemidji City Council approved a contract with VenuWorks 5-1 during Monday night's council meeting. Councilor Barb Meuers was opposed and Councilor Greg Negard was absent.

"We believe it's a good contract," said City Manager John Chattin.

The 38-page contract dictates that VenuWorks will provide facility management, operation and marketing for the BREC.

The city will pay VenuWorks a base management fee of $5,000 per month between now and the opening of the BREC.

Once the facility is open through Dec. 31, 2010, the city will pay VenuWorks $9,000 per month. On Jan. 1, 2010, and each Jan. 1 during the term of the contract, the management fee will increase by a percent equal to the Consumer Price Index, but will not exceed a 3 percent increase.

Variable fees will be paid by the city to VenuWorks as follows:

- 10 percent of advertising, sponsorship revenues and pouring rights, not previously assigned under the city's lease agreement with Bemidji State University. (An additional fee of up to 1 percent of advertising, sponsorship revenues and pouring rights may be earned in each of the following areas: costumer satisfaction survey scores, overall marketing efforts, cooperation with the Bemidji Visitors and Convention Bureau, cooperation with BSU and overall financial performance. Benchmarks required will be set annually by VenuWorks and the city's advisory board.)

- 5 percent of food and beverage sales, net of sales tax.

The term of the contract is for five years and three months beginning Oct. 1.

Other specifics of the contract include:

- The city will create and appoint a BREC advisory board that will meet and work with VenuWorks on a regular basis.

- VenuWorks will be responsible for contracting, directing and monitoring food and beverage services; perform all facilities maintenance work, including the facility and landscaping, irrigation systems and grounds; provide all routine cleaning and janitorial services; be responsible for all pest control services; be responsible for all snow and ice-removal services on the pathways, sidewalks and parking lots; and be responsible for trash removal.

- The city will approve the BREC's annual budget, business plan, any expenditure for personnel or equipment in excess of the budget, and set policies and procedures governing the booking and scheduling of events.

Steve Peters, the president of VenuWorks, attended the council meeting as he fielded questions from city councilors.

Mayor Richard Lehmann said he did not see specific language in the contract that dealt with situations in which the BREC is not able to be used.

What happens to the customers who were planning to use the BREC? Lehmann asked.

Peters said there have been a few cases were a facility has been unable to be used, such as a flood or undetected mold issue, and VenuWorks has refunded money, if possible.

For situations like a planned wedding reception, Peters said, VenuWorks worked with the customer to find an alternate site.

But those situations, he explained, are covered through the contracts with the user groups and not the owner of the facility.

Councilor Ron Johnson said he would like to see VenuWorks not utilize a non-compete clause with its general manager of the BREC.

Situations or feelings can change over time and if the city chooses to end its agreement with VenuWorks, Johnson said, it may wish to maintain its relationship with the general manager.

Peters said it has been VenuWorks' practice to utilize non-compete clauses, but would be open to discussing the option with the city, if deemed necessary.

"If it is of significant importance to the council, we can probably do that," he said.

Peters noted that there have been other situations where a non-compete was not utilized or where it was waived.

"We haven't stood in the way of letting that happen," he said.

Peters also said VenuWorks would work with the city to meet its annual budget requirements and submit a business plan.

That plan, he explained, would include a market analysis, budget, marketing plan and rates.

"And all of that is subject to your approval," he told the council.

The approval of the contract by the City Council was dependent on favorable responses from the state and the city's bond council. City Attorney Al Felix said there may be some revisions based on comments received.

General manager

Peters said he would anticipate that a general manager would be hired for the BREC in 45 to 60 days.

While three potential candidates were interviewed at Bemidji City Hall earlier this year, Peters said the company would conduct a national search.

He also said VenuWorks keeps a list of candidates and employees who would be interested in potential positions and knows of several who are interested in the Bemidji position.

"We could bring some strong candidates in as soon as one week or 10 days," he said.