5/7/2013 8:07:00 AM CENTER OF ATTENTION: CFD is official owner of PV Events Center
At the August 2005 groundbreaking of the event center, PV Town Manager Larry Tarkowski, Bill Fain, Lew Rees, Brad Fain and Wayne H. Davis faced off. A development agreement granted ownership of the building to a town CFD.
File photo courtesy The Daily Courier
This is the third installment in a series of articles on the financial status of the Prescott Valley Convention and Events Center.
When it comes to the success of the Tim's Toyota Center, local developer Brad Fain said his family's company has an interest, but no outright ownership.
"People think we own the building, but it is owned by the community," Fain said. "We contributed the land to the project."
While the Fain Signature Group sees the center as a vital anchor to the downtown district - in which the company has a stake - Fain said its involvement stops there.
"We have a vested interest in seeing it succeed," Fain said of the arena that serves as the home to the Arizona Sundogs hockey team. "Our stake is the same as the community's stake."
That is because the building is public property, he maintains. "It is owned by a Community Facilities District (CFD), and the Town Council sits as the board of the CFD," Fain said. "So the building is really owned by the public."
The four-party development agreement that preceded the development of the Events Center corroborates that, stating that the center would "be conveyed to a new communities facilities district to be formed by the town (the Entertainment Center Community Facilities District)."
That conveyance was scheduled to take place "promptly after the PVCEC (Prescott Valley Convention Events Center) financing is obtained."
Rent or payment to the community facilities district for the building "shall be equal to one dollar per year, plus payment of all expenses of the PVCEC and all debt service payable under the PVCEC financing," the agreement added.
Town officials agree that the Entertainment Center Community Facilities District officially owns building.
That was done, they say, for three reasons: to hold title to the building and the site; to enter into the PVCEC agreement with the developer; and to establish necessary facilities regulations.
The Town of Prescott Valley and the Fain Signature Group have entered many development agreements through the years, and the agreement for the Events Center built on an existing one.
In the late 1990s/early 2000s, the two entities had partnered on the initial phases of the entertainment district, which included the Harkins Theater.
The earlier agreement had committed a 1-percent sales tax reimbursement to the Fains.
To help make the Events Center project happen, Fain said, "We would defer our 1-percent, to be applied to the building."
That is the revenue that makes up the Fain Escrow Account, which is obligated toward the Event Center's debt service, along with several other sources.
In the healthier economic climate of the mid-2000s, Fain said, "There was a good chance that we would get that back."
A section in the development agreement titled "Fain reimbursement obligations" refers to that possibility, noting that the reimbursement would be capped at $13.8 million.
Although Fain said the company is "still hopeful" about the reimbursement, he said the recession had changed the outlook. "We didn't plan for such an event for the last three, four, five years," he said of the recession.
Prescott Valley Management Services Director Bill Kauppi explained that, like the town's share of sales tax, the Fain money was to be put aside in the event the Events Center did not generate adequate revenue for the debt service.
"Hopefully, we wouldn't have to touch Fain's 1 percent," Kauppi said. "The facility was supposed to generate adequate revenues for a significant portion of the debt service."
But for the past three or four years, the center has been losing money, and has contributed no net revenue to the debt service. As a result, the
town and Fain sales tax revenue has been going to pay off the debt.
Just as the Fain Signature Group has no ownership in the building, Fain said it is not directly involved with the management.
"Our job is outside the building," he said. "Our role was to build the parking lots."
The development agreement put the management of the building in the hands of Global Entertainment.
While Global provides regular reports to the Fain Signature Group "as a courtesy," Fain said the Fain company is not involved in the day-to-day operations.
Still, he has some ideas about how the center could shore up its revenues.
"I think what it's lacking are two to four signature events a year that the public would embrace," Fain said. "They need the diversity of music and the diversity of entertainment."
Also tying the Fains to the Event Center is their part-ownership in the Arizona Sundogs team.
It was that involvement that had Fain, along with marketing and public relations director Lew Rees, Sundogs general manager Chris Presson, and Sundogs team captain Jason Morgan, go up in a scissor-lift this past week to promote sales of Sundogs' season tickets.
They reached their 300-ticket goal in five days, and Fain and Rees said this week that the effort not only helped to expand ticket sales, but it also broadened the exposure of the Prescott Valley team.
"We exceeded our goal on community outreach and media coverage," Fain said. "I don't think anybody expected international coverage."
The gambit ended up getting broad coverage in Phoenix, Canada, and England, Fain and Rees said.
Fain sees the effort as helping to "bring the team and the community together." He added: "What you saw there was part of a bigger effort."