FROM:
Development Services
SUBJECT:
Title
Authorize Operating funding to the Stage Red Enterprise FundEnd
RECOMMENDATION:
Recommendation
1. Approve funding for operating expenses to ASM Global in an amount not to exceed $1,685,413.
2. Amend the Memorandum of Understanding (MOU) for the inter-city loan between the City of Fontana General Fund, Capital Reinvestment (Fund 601), and the Stage Red Enterprise Fund, increasing the loan by $1,685,413 from $2,064,587 to $3,750,000.
End
COUNCIL GOALS:
• Promote economic development by pursuing business attraction, retention, and expansion.
• Practice sound fiscal management by living within our means while investing in the future.
DISCUSSION:
The City of Fontana has undertaken a comprehensive revitalization of Downtown Fontana, with the creation of an entertainment district serving as a primary component to attract visitors and support economic activity. Stage Red represents a keystone investment in establishing this district and activating the downtown core.
The opening of Stage Red in summer 2024, ahead of other planned developments, was a strategic decision to accelerate downtown recovery. Expansion of the event and show schedule has required significant City investment; however, early indicators demonstrate positive momentum, including the establishment of new businesses in the surrounding area. As additional development occurs and visitation increases, attendance at Stage Red is expected to grow, thereby reducing the need for ongoing subsidy.
For Operating Year 2027, staff recommend additional funding to support continued programming and operations. Specifically, staff propose allocating $1,500,000 from Capital Reinvestment (Fund 601) and $185,413 from the General Fund to the Stage Red Enterprise Account, for a total funding increase of $1,685,413.
The City has previously issued three operating loans; the table below summarizes these loans to the Stage Red Enterprise Account, including funding sources and amounts, resulting in a total outstanding balance of $2,064,587.
Stage Red Operating Loans Summary
|
Fiscal Year |
Funding Source |
Amount |
|
2023-2024 |
General Fund |
$750,000 |
|
2024-2025 |
Capital Reinvestment (Fund 601) |
$1,000,000 |
|
2025-2026 |
Capital Reinvestment (Fund 601) |
$314,587 |
|
Total Outstanding Balance |
$2,064,587 |
To sustain and expand programming in the current fiscal year, the operator requires total funding of $1,685,413 for events and operating expenses. The proposed funding structure reflects this need and ensures continued activation of Stage Red as a catalyst for downtown revitalization.
The City will advance funds to ASM Global as a Cash Flow Shortfall as follows:
• $100,000 upon City Council approval.
• Additional funding will be disbursed monthly, as needed, after review by city staff of monthly expense and income statements.
Such funds shall be deposited by the operator in the operating or payroll account(s) and used only to pay Operating Expenses.
FISCAL IMPACT:
The fiscal impact associated with the approval of this staff report is $1,500,000 from Capital Reinvestment (Fund 601 - Misc. Project #28001008) and $185,413 from the General Fund to the Stage Red Enterprise Account, for a total funding increase of $1,685,413. Appropriate budget adjustments will be included with the Fourth Quarter Budget Status Report. The $3,750,000 repayment of the loan will commence five (5) years from the Effective Date and Stage Red will repay three hundred and seventy-five thousand dollars ($375,000) annually beginning on or before June 30, 2029, with full repayment projected to occur on or before the date the agreement expires, which is June 30, 2038.
MOTION:
Approve staff recommendation.