Years after hammering SMG, Convention Center catering deal gets minimal looks

Fresno’s fearless reform-minded legislator has turned into City Hall’s passive stand-pat mayor.

That appears to be the reality when the issue is the Convention Center and its lucrative catering contract.

The City Council on Thursday will consider a proposal that would give Pardini’s Inc. another five years as the Convention Center’s No. 1 caterer.

The Pardini family has been a popular mainstay on Fresno’s restaurant/catering/banquets scene for decades. Pardini’s Inc. has provided catering services to the Convention Center for the past 17 years.

The current deal expires on Oct. 26. The Convention Center is owned by the city but operated by SMG.

Based on estimates, writes Convention Center General Manager Bill Overfelt in a report to the council, the new five-year deal is “projected to generate over $1.7 million in commission revenue for FCEC (Fresno Convention Center & Entertainment Center) over the term of the agreement extension. Under the Management Agreement between the City and SMG, such revenues are included in the annual operating revenues for FCEC.”

Near as I can tell from Overfelt’s report and the proposed contract, the new deal was reached through one-on-one negotiations between the SMG and Pardini’s. I gather the deal isn’t the product of an open and competitive bidding process.

Single-source contracts involving the people’s assets aren’t unusual at City Hall. But this one caught my attention. That’s because I remember when City Council Member Lee Brand in 2013 made quite a name for himself by publicly blistering SMG for its slovenly management of a valuable Downtown venue.

Fresno at the time was fighting to stay out of bankruptcy court. Brand wanted every penny he could find for the city treasury. He told Overfelt to pare expenses, produce more revenue and reduce the city subsidy to the Convention Center or City Hall would send SMG packing.

SMG had been a City Hall ally for nearly a decade. Brand didn’t care a whit about old ties. He insisted that serving the public through proper process was more important than sentiment.

Brand is now the mayor. The Pardini’s report was written by Overfelt, but it has the stamp of approval from City Manager Wilma Quan-Schecter and Assistant City Manager Bruce Rudd.

That means the Overfelt report has Brand’s approval.

Let’s take a look at the proposed deal, according to documents posted on the City Clerk’s website.

Pardini’s is to pay SMG:

· 27.5% of modified net receipts of zero to $1.3 million from catering sales for all events serviced.

· 30% of modified net receipts of $1.3 million and greater from catering sales of all events serviced.

· 30% of modified net receipts from sales of alcohol spirits and non-alcoholic beverages.

· 35% of modified net receipts from sales of all beer and wine.

· 5% of modified net receipts from catering sales service for foodstuff and non-alcoholic beverages for backstage catering.

· 10% of modified net receipts from catering sales service for alcoholic beverages for backstage catering.

· The percentage of modified net receipts from outside catering sales as mutually agreed upon in writing by contractor and operator prior to contractor’s provision of any such outside catering services.

Overfelt writes that “the parties have agreed that (the) commission paid by Pardini’s will increase by 2.5% to 27.5% of Pardini’s Modified Net Receipts up to $1.3 million and increase to 30% of Modified Net Receipts for catering sales greater than $1.3 million….”

It’s not clear to me from Overfelt’s report what percentage Pardini’s is currently paying SMG/City Hall of modified net receipts over $1.3 million. Nor is it clear to me from Overfelt’s report what percentage Pardini’s is currently paying of modified net receipts from the sale of booze and soda.

I understand “modified net receipts” to be the profits from sales after you subtract all costs and taxes.

Overfelt doesn’t come right out and say it, but his report suggests that Pardini’s has been a loyal and trusted vendor to the Convention Center. If we’re talking 17 years, that means Pardini’s began delivering catering services to the Convention Center when the venue was operated as well as owned by City Hall.

It was in 2003-2004, during Alan Autry’s first mayoral term, that City Hall after long and controversial debate decided to hand the Convention Center’s day-to-day operations to SMG.

Overfelt’s report also explains in a rather convoluted manner why the Pardini’s deal is even coming to the City Council. In essence, City Hall for years was content to let SMG/Overfelt and Pardini’s hammer out agreements between themselves. That changed on Jan. 1, 2014 when an amended agreement between City Hall and SMG required SMG to submit all Convention Center subcontracts to the city for approval.

That 2014 amended agreement between City Hall and SMG is due totally to the relentless investigative pounding by Council Member Brand in 2013. Council Member Brand at the time happily threatened to kill City Hall’s contract with SMG (he said he had the goods to do this) if SMG didn’t do right by the public. If necessary, Brand said, he would happily open the Convention Center operations contract to an open and competitive bidding process.

So, why isn’t Mayor Brand doing the same thing with the Convention Center catering contract? Would not, say, 30% of modified net receipts of catering sales up to $1.3 million and, say, 32.5% of modified net receipts of catering sales over $1.3 million be a plus for the people’s treasury? Might not another reputable and proven catering company deliver such a proposal in a bidding war? Might not Pardini’s make a sweeter proposal if it was in the middle of a bidding war?

I don’t know why Brand isn’t opening the Convention Center catering contract to all qualified bidders. Overfelt’s report doesn’t address this issue. Overfelt’s report doesn’t have an addendum on this issue from Quan-Schecter or Rudd.

But I do know this: Fresno today isn’t on the edge of bankruptcy, but the city still needs every penny it can get. The Mayor won’t increase the roster of sworn police officers to the promised 1,000 by underselling city assets.

I close with words from the Convention Center page in the city’s 2017-18 budget:

“Due to the loss of anchor events such as the Future Farmers of America conference and the circus coupled with rising facility repairs and maintenance costs, and the minimum wage increase, the anticipated FCED operating deficit for FY 2018 is projected to be $766,000. Due to better than anticipated performance in FY 2016, FCED is able to offset $100,000 of the deficit with carryover, leaving $666,000 to be funded in FY 2018. This is roughly $84,000 more than the $581,400 funded in FY 2017.”

The Convention Center subsidy comes from the general fund. Cops, firefighters and parks come from the general fund.

More catering money means less Convention Center subsidy.

The new Pardini’s contract is on Thursday’s consent calendar. That means it’s not supposed to get any public discussion.