Veterans Memorial Coliseum Options Study REPORT TO CITY COUNCIL AUGUST 31, 2015 ACKNOWLEDGEMENTS Portland City Council Mayor Charlie Hales Commissioner Nick Fish Commissioner Amanda Fritz Commissioner Steve Novick Commissioner Dan Saltzman Office of Management and Finance Fred Miller, Chief Administrative Officer Betsy Ames, Senior Policy Analyst Susan Hartnett, Spectator Facilities & Development Manager Project Advisory Committee Irene Bowers, Portland Development Commission Christopher Oxley, Rip City Management Douglas Piper, Portland Winterhawks Project Consultants Stephen Weeks, Boora Architects Miguel Hidalgo, Boora Architects Jay Lenhardt, Conventions Sports and Leisure International Jeff Cole, Konstrukt Doug Nelson, Nelson Capitol CPM Special Thanks Doug Obletz, Shiels Obletz Johnsen Skylab Architecture SERA Architects Photo Credits Brian Libby Friends of Memorial Coliseum City of Portland Archives Spectator Venues Program Portland Rose Festival Portland Arena Management Cover Photo: Memorial Coliseum’s main entrance, 1960s Charlie Hales, Mayor Fred Miller, Chief Administrative Officer 1120 SW Fifth Ave., Suite 1250 Portland, Oregon 97204-1912 CITY OF PORTLAND (503) 823-5288 FAX (503) 823-5384 OFFICE OF MANAGEMENT AND FINANCE TTY (503) 823-6868 August 31, 2015 Dear Mayor and City Commissioners, My staff and I are pleased to present this report and supporting materials exploring options for the future of the Veterans Memorial Coliseum (VMC). As you know, the facility has served the City well over its 55 years, having hosted over 5,000 events, and it continues to be well used with an average of 117 events per year. However, many of the building’s critical systems date from 1960 and are in need of replacement. Since 1995, the City has repeatedly studied what to do with the facility. Most recently, in 2012, a public-private partnership to implement a renovation project did not come to fruition. The VMC Options Study takes a comparative look at different potential options and their long-term financial implications. The options explored in the report that follow include: Continue Current Operations/Temporary Closure Permanent Closure/Deconstruct for Future Redevelopment Renovate/Remodel/Transform (including 5 scenarios of various magnitudes) The VMC Options Study Report does not make a recommendation about a preferred course of action. The information provided here is intended to help Council and the public better understand the opportunities and challenges of several options for the future of the VMC. This study provides an overview of each option, along with financial information, rough cost estimates, and risks associated with each alternative. After reviewing the findings in this report, I offer the following observations: While it may be the most obvious course of action for the near-term, the option of continuing current operations of the facility and addressing system failures as they occur with emergency repairs and temporary closures is going to become less sustainable over time. Continuing on this path for very long could cost the City significant resources while eroding the viability of the facility as a spectator venue. While it’s likely we can continue status quo operations at the VMC for a period of one to two years, continued operations for an indefinite period without a long-term plan for the facility is not a sustainable or fiscally responsible course of action. Reasonable options for renovation exist. While they involve significant capital investments, both the Tenant/User Enhancements and Strategic Market Enhancements options present alternatives for the VMC that are financially sustainable from an operational perspective. Both of these scenarios are predicted to produce modest annual operating profits for a period of 20 to 40 years. These two renovation options succeed in An Equal Opportunity Employer To help ensure equal access to programs, services and activities, the Office of Management & Finance will reasonably modify policies/procedures and provide auxiliary aids/services to persons with disabilities upon request. large part because they retain the facility’s ability to serve its current tenants and users, while offering targeted improvements to attract additional events - in particular more revenue-producing events. As discussed in the report, there appears to be demand in the local market for an updated flexible venue with 3,000-8,000 seats. While expensive, renovating the VMC will cost much less than building a new facility of this size, and is a more environmentally and economically sustainable approach. It’s also worth noting that the estimated cumulative economic impact associated with these options is $2.1 billion over an expected 30-year span for the Tenant/User Enhancements and $3.5 billion for Strategic Market Enhancements over the expected 40-year span. Permanent closure and eventual deconstruction of the VMC should remain on the table. This option would be contentious and challenging to realize and the process of preparing for demolition, developing a redevelopment plan, and finding willing development partners would take several years to organize and would require significant resources. Through it all, the unanswered question remains about what would take the place of the VMC and how it would provide a greater public benefit than renovation of the current facility. One of the challenges in determining the future of the VMC is its relationship to further development in the Rose Quarter and western portion of the Lloyd District. While these two issues are not specifically tied together, it may take a broader solution to reach a conclusion on the VMC. The biggest decision facing the City is this: Should the VMC be preserved as a public spectator facility for the next 20 to 40 years? If so, it is clear that major investments will be needed, and soon. Even without all the answers in hand (funding for example), a clear direction from the Council on the desired future of the VMC would allow the City and its partners to work with purpose on implementation strategies. Deferred maintenance and major needed repairs on the facility have accumulated over the years to a point at which the costs of keeping the facility open will begin to rise rapidly, while revenues generated from the facility are likely to decline. Decisions about near term investments in the facility might be re-prioritized with clarity about the future. If, for example, the facility is to be permanently closed, it doesn’t make sense to invest millions of dollars for ongoing repairs. Unfortunately, as with many challenges of aging infrastructure facing the City, the VMC presents another difficult problem, with no apparent easy solution. This report is intended to help further the conversation by providing new information on the opportunities, challenges, costs, and potential revenues associated with several options, including continuing the status quo operations and a closure/deconstruction option. My staff and I look forward to assisting Council with understanding this information and developing a recommendation for the future of the facility. Fred Miller, Chief Administrative Officer TABLE OF CONTENTS VETERANS MEMORIAL COLISEUM: YESTERDAY AND TODAY .............................. 1 A Brief History of the Memorial Coliseum ................................................................................... 1 Veterans Memorial Coliseum Today ............................................................................................ 4 VETERANS MEMORIAL COLISEUM OPTIONS STUDY .............................................. 7 Purpose and Approach .................................................................................................................. 7 Description of the Options ............................................................................................................ 8 Continue Current Operations/Temporary Closure .............................................................. 8 Permanent Closure/Deconstruct for Future Redevelopment .............................................. 8 Renovate/Remodel/Transform ............................................................................................ 8 Summary of VMC Options Study Analyses and Key Findings ................................................ 10 Summary Comparison of Study Options and Findings ..................................................... 13 VMC Options Study Analyses and Findings ............................................................................. 15 Continue Current Operations/Temporary Closure Option ................................................ 15 Permanent Closure/Deconstruct for Future Redevelopment Option ................................ 17 Renovate/Remodel/Transform Option .............................................................................. 22 Appendices and Consultant Reports ......................................................................................... 40 VETERANS MEMORIAL COLISEUM: YESTERDAY AND TODAY A Brief History of the Memorial Coliseum The Veterans Memorial Coliseum (VMC), which was originally dedicated as Memorial Coliseum1, was built as a multi-purpose arena and completed in 1960. At the time of its construction, the VMC was noted as a “technological feat of engineering and operation unrivaled by any other large civic structure in the Pacific Northwest”2. It is considered an excellent example of International Style Modernism architecture, which earned it a place on the National