Budget troubles postpone hiring of Key West amphitheater manager

BY PRU SOWERS

KONK LIFE STAFF WRITER

Difficult budget planning for the upcoming fiscal year has postponed the selection of a manager for the new amphitheater in Truman Waterfront Park and may even force the contract to be rebid.

Key West City Commissioners were slated to vote on a proposal to hire We’ve Got the Keys, a local travel and events company, to manage the new amphitheater, including booking musical acts and local organizations wanting to rent the facility. But city manager Jim Scholl pulled the resolution off the June 19 agenda, saying he wanted to finalize the fiscal 2018 city budget before committing to hiring a manager for the venue.

City staff are in the middle of the annual budget planning for 2018-19 and are worried that costs so far are outweighing revenue, Scholl said. While city department heads are still presenting their proposed budgets for the upcoming fiscal year, it is clear that they want more than anticipated revenues can support. And with the We’ve Got the Keys’ proposed contact coming in at $200,000 — $150,000 as an annual management fee with a requested $50,000 marketing budget to promote the amphitheater – Scholl doesn’t want to commit the city to paying it until the new budget is finalized.

“We’ve got to look at everything before we add to the budget,” he said. “Two hundred thousand dollars is significant right now.”

We’ve Got the Keys came in first in a staff ranking of the three bid proposals, ahead of Frameless Creative LLC and Klass-Ex LLC. Klass-Ex, based in Miramar, FL, came in second, proposing to be paid a $75,000 management fee annually while also collecting an unspecified amount from each ticket sold at public events. Frameless, based in Miami Beach, proposed a $150,000 annual management fee plus 22 percent of the gross revenue in excess of $300,000, 30 percent of the gross receipts from selling event sponsorships, and the city paying for management insurance.

In addition to the $150,000 management fee proposed by We’ve Got the Keys, the group also wants 20 percent of all event sponsorships and a percentage of all merchandise, membership and memorial fee revenue.

Part of any fees paid to an amphitheater management firm would come out of the revenue anticipated from renting the facility to musical acts. But while the venue has brought in some money from concerts by Eddie Money and Blue Oyster Cult, future revenues are uncertain, Scholl said, adding that depending on where the final city budget comes in, it may be necessary to rebid the amphitheater management contract.

“We’re getting to the point where we’re cutting bone,” Scholl said about the current city budget negotiations. “I don’t know that I can balance the budget without asking the city commission for a tax increase.”

Some of the pressure on the budget is coming from Truman Waterfront Park, which opened in April. The park will have ongoing maintenance and construction costs and there is no dedicated revenue source identified yet to pay for those costs, Scholl said. In addition, Hurricane Irma recovery costs are topping $7 million and while the federal government has pledged to reimburse all or most of that, payment has trickled in slowly for the $2 million the city has already submitted for reimbursement. That has depleted the city’s normally-healthy reserve fund.

“If we get 80 to 90 percent of it [$7 million Irma cost], we’ll be doing very well,” Scholl said.

City budget planners are set to set a tentative tax millage rate in mid-July, with a final millage set in September.

We’ve Got the Keys is operated by Nadene Grossman Enterprises, a company formed in 2004 to manage tours, weddings and corporate events in Key West. Grossman-Orr took over managing Fantasy Fest last year and also produces the Key West Songwriters Festival. She is one of the founding producers of the Key West Film Festival.

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