Business Retention and Development Committee Agenda and Packet 2015 12 07

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SUBJECT: 2016 DOWNTOWN PATIO PROGRAM FEE DISCUSSION DATE: DECEMBER 7, 2015 PAGE 2 OF 3 • Zucca Italian Restaurant (36 feet) In November 2013, the patio rental rates were determined by City Council after Staff presented detailed information on various options during several meetings, including; • BRaD committee on September 9, 2013. • Public meeting on September 9, 2013 with all downtown restaurants invited. • City Council Study Session on October 22, 2013. City Council decided to charge a fee of $500 per season for each 12' patio section for each participating business, and $250 per season for each 6' section. Any modifications to the rental fees may be made by the City Manager. Revenue in 2015 was $9,500. The $500 fee was enough to cover operating costs of the program, but not build a replacement reserve. DISCUSSION: Through the 2016 City Budget discussion, City Council showed an interest to revisit the Downtown Patio rental rates. Since rental changes may be made by the City Manager, Staff would like BRaD input on whether to increase the fees, and if so, to what amount. Program Costs The current $500 per 12' section does not cover all the costs of operating, maintaining, and building a replacement reserve. Below is Staff's estimate of the patio program's costs: 1) Set up /take down — Public Works (PW) estimates $1,500 in labor costs to set up and another $1,500 to take down the patios. 2) Maintenance — PW estimates it will cost $2,000 per year to maintain the wood, repair /replace parts, paint, and other maintenance on the existing patios. 3) Administration — Staff estimates it will cost $2,700 per year to administer this program. 4) Patio depreciation — The patios must be replaced when they have exceeded their useful life and the program should have funding available at the time it is needed. Current replacement cost for one 12 foot patio is $20,000. Assuming a 15 -year life and 3% inflation, $1,675 is needed per 12' patio per year to amass enough funds to replace the patio when needed. Yearly total is $31,831. 5) Insurance - $500 (staff estimate). 6) Storage - $500 (staff estimate). Total estimated costs above to operate the program for the 2016 season are $40,531. This translates to a cost per 12 linear feet of patio of $2,133. Much of the increase from 2013's analysis is due to the significant increase of the cost to manufacture a 12' patio. The increase is due to material and labor costs increases, but also because there is not a volume discount as replacement will likely happen over multiple years, rather than all in a single season. BRAD COMMITTEE 6