Durham City Council has renewed operating agreements for two of the city’s most popular attractions, the Durham Performing Arts Center (DPAC) and the Durham Bulls Athletic Park (DBAP), with the possibility of extending the City’s partnerships with both operators into the next 20 to 27 years.
The agreement with the Durham Bulls, good until 2033, with two additional five-year options for renewal, is projected to save the City about $7.4 million over the life of the lease. It also restructures each party’s financial obligations, making operating costs and expenses the responsibility of the Durham Bulls. Additionally, the Durham Bulls will be responsible for maintenance and repair costs up to $200,000 as well as all utility costs.
About $6 million worth of deferred maintenance remains to be done by the City, in addition to nearly $8 million worth of improvements requested by the Bulls. The Durham Bulls will contribute $2 million to the improvements and will be responsible for any cost overruns.
“This new financial model will help pay for debt service and other capital improvements, eliminate the need to use general funds to support the ballparks’ day-to-day operations, and reduce the City’s obligation for future capital repairs and upgrades,” City Manager Tom Bonfield said. The current lease agreement was scheduled to end in 2015.
"After 18 seasons, we love hearing our fans still refer to the DBAP as ‘the new ballpark,'” said George Habel, Durham Bulls’ vice president. “The City of Durham has made a significant commitment to maintain that caliber of experience for our patrons and players. The Bulls pledge to be a responsible steward of this public investment as we assume operational responsibility for the ballpark. It’s gratifying to know that the DBAP is the home of Bulls baseball for decades to come!"
The DPAC agreement comes after five successful years of operation with J.N. Worldwide, LLC (Nederlander) of New York, NY and Professional Facilities Management, (PFM) of Providence, RI. “This has obviously been a very successful partnership, not only for the City and PFM/Nederlander, but also for Durham and Triangle residents,” Bonfield said. “I’m excited about the opportunity to continue this tremendous relationship that has brought outstanding, world-class entertainment and given an economic boost to our city.”
"The public-private partnership with the City and PFM/Nederlander has produced many positive results, from filled restaurants before and after shows to record attendance numbers and first time visitors coming to downtown Durham from throughout the region. The new agreement locks in place this teamwork for DPAC's continued long-term success", said Nick Scandalios, executive vice-president of the Nederlander Group.
The contract, which would have been up for renewal in 2014, has a maximum 27-year term, with an initial 10-year term starting in May and ending June 30, 2023, with an option for PFM/Nederlander to renew the agreement for an additional seven years. Following that term, PFM/Nederlander would have two additional five-year renewal options, ending in 2041.
The agreement continues the profit-share split, currently 60/40 percent to the City, and provides incentives for the operator to reach higher revenue milestones. The City’s share of profit would continue to be used for capital replacement, debt service, maintenance and repair of the facility, which is owned by the City. PFM/Nederlander will continue to collect a management fee and other back office fees that will adjust yearly. DPAC also will be available for the American Dance Festival every summer. The Durham Convention & Visitors Bureau estimates the entire district attracts more than 1 million visitors annually, with a combined annual economic impact of more than $75 million.
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