Kenner OKs Pontchartrain Center management deal

Kenner Mayor Michael Yenni proclaimed last month that the new management deal his administration negotiated for the Pontchartrain Center is the best agreement in the facility’s 21-year history.

The Kenner City Council has given him a chance to prove it.

Council members unanimously agreed to a new five-year management deal with SMG that Yenni says will save Kenner at least $95,000. The deal has a five-year renewal option that must be approved by the council.

Yenni’s claims about the new agreement are based on the fact that it eliminates a management fee the city previously paid SMG. Instead, SMG’s fees are tied to its ability to reduce the annual subsidy the city provides the facility. Yenni called the new deal a huge improvement for the city, which has subsidized operations at the Pontchartrain Center since it opened in 1991, sometimes by as much as $600,000.

“Just the way the contract is developed is already going to see savings,” Yenni said before the council meeting.

Under the deal, Kenner would still subsidize operations at the Pontchartrain Center, which officials acknowledge has never broken even or shown a profit in its history. The center brings in about $1.3 million and costs about $1.7 million to operate. SMG presents Kenner with an annual budget projecting revenues and expenditures, and the city is responsible for covering any shortfalls, said Duke McConnell, the city’s finance director.

However, in the past, in addition to Kenner covering all employee costs associated with the center, the city also provided the company with a flat fee for its management. Now, SMG will only be paid its management fee if the city subsidy is less than $350,000. SMG will receive 100 percent of the first $75,000 it cuts from the subsidy and then a sliding percentage of the rest of the revenues. Yenni called the deal a true “performance contract,” which creates an incentive for SMG to increase revenues.

“They know what they’ve got to do to make that business work,” Yenni said.

He said the Pontchartrain Center recently hosted Venezuelan expatriates who came to the region to cast absentee ballots in that country’s elections. Kathleen Turner, the facility’s general manager, said new seating and a marketing deal with the Jefferson Convention and Visitor’s Bureau should help draw events to the center.

Yenni has argued that its unrealistic to expect the Pontchartrain Center to ever make money, but the city should expect the facility to be an economic development engine. The state is looking to redevelop portions of Laketown as a commercial and recreational center, and the Pontchartrain Center could benefit from that improvement.

The more people who come to the center, the more hotel and motel taxes the city will collect, Yenni said.

The council had few comments about the new agreement, and those that were made focused on Councilman Keith Reynaud’s request that any renewals of the agreement be brought to the council for a vote.

Reynaud said that under a new charter change, all deals in excess of $100,000 must be brought to the council, but he wanted to make sure the council’s approval also contained that stipulation. Councilmen Kent Denapolis and Joe Stagni praised that amendment noting that it won’t allow Yenni to tie future administrations to SMG.

“The makeup of this council could be completely different,” Denapolis said.