Council Backs Return Of Investment Policy For Special Events

Council Backs Return Of Investment Policy For Special Events
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OCEAN CITY — In the interest of gaining a better understanding of just how much special events mean to the resort in terms of town’s costs in supporting them versus the potential revenue gained, Ocean City officials on Tuesday endorsed a new Return on Investment (ROI) policy.

Ocean City Special Events Director Frank Miller briefed the Mayor and Council on Tuesday on the long-awaited ROI policy, which will be attached to the existing special permit request forms and provide recommendations to the elected officials on whether or not to approve the events, and whether to provide financial assistance or relief from some of the fees associated with the approvals.

Under the proposal, special events large and small will be required to fill out an expanded approval request form and provide detailed information about the projected number of attendees, how many are expected to stay overnight, what support they would need from the town, both in-kind and financial, and if they are a for-profit or non-profit organization among other things. The information supplied would be submitted to the various departments affected by the special events, and the department heads would provide recommendations. In short, each special event would be analyzed to determine the town’s cost of supporting the event and the event’s potential impact on tax revenue and the business community.

“We’re trying to provide a good gauge on the value of the special events that come before you for approval,” said Miller. “They can be either existing events or new events. Since we’re talking about forecasting, it’s not an exact science. We’re trying to take subjective information and put some parameters around it.”

Miller said the ROI policy would be applied to all special events that come before the council for approval, from a 12-team soccer tournament to a 100,000-participant event such as Bike Week, for example.

“We’re trying to make all events comparable,” he said. “Apples to apples is the goal, whether it’s a soccer tournament or a Cruisin’ event.”

Miller provided a few examples of how the ROI could be applied. Bike Week, for example, could prove to provide $5 million in total spending for the event and provide $164,000 in tax revenue to the town. A smaller event, such as the Crab Soup Cook-Off, held on Wicomico Street each spring, could bring in much less in total spending and the number of attendees, but could get a decent ROI rating because of minimal financial commitment from the town. Another example given was the Sand Duel Soccer Tournament, which would likely rate high for a variety of reasons.

“The ROI data could show that tournament brings 15,000 attendees to Ocean City, almost all of which are lodging overnight,” Miller said. “That would be an example where the tax revenue to the town could be more than a larger event.”

While the ROI data would be used to help make recommendations for approval, or decisions to waive or not waive fees for some special events, the ultimate goal is getting a better handle on the bottom line.

“The biggest part of this is the potential tax revenue,” he said. “It should predict the daily spending estimate for convention or special event attendees, from food and lodging to amusements. It could be the perfect model for us to start with.”

Councilman Tony DeLuca praised the ROI model for providing the council with firmer information on which to base approvals or waivers of fees.

“What’s different about this is it helps answer the question to approve or not approve an event, or to waive or not waive fees,” he said. “This model gives us a recommendation, which is really nice.”

Councilmember Mary Knight said the ROI policy could become a model for other jurisdictions facing the same decisions to emulate.

“I’ve been on the council for nine years and I always wanted return on investment information for special events,” she said. “I’m extremely impressed with this. I think you’ll have other parks and recreation departments calling you for this model.”

Finance Administrator Martha Bennett suggesting taking the ROI policy a step further.

“I think we could do an event recap,” she said. “We could do a post-event analysis to verify what was supposed to happen did happen. I think that would validate the data and the ROI system.”

Mayor and Acting City Manager Rick Meehan said the council would potentially be asked to use the ROI data to make a decision on events that town has hosted year after year. With the new ROI data, town officials might have to make tough decisions on whether or not to support some events financially or waive all or a percentage of the fees. Miller explained the data can be used to see where money can be saved or fees can be waived.

“As a producer of special events, you have to have a workable model and if your numbers don’t show you can make it work, you either have to ask for a discount or figure ways to cut costs,” he said.

Councilman Wayne Hartman somewhat questioned the waiver of fees for some non-profit special events and how those decisions are made. While he supported the ROI policy, Hartman reminded his colleagues they are stewards of the taxpayers’ money.

“I think we need to trust this information and use it wisely,” he said. “I also think we need to not dictate to the taxpayers what non-profits and charities we’re using their money on.”

Councilman Dennis Dare reminded the Council the ROI policy will not lead to black and white decisions, but merely provide recommendations.

“This is just a guideline, it’s not a charter change,” he said. “Everything is not cut and dried. It just gives us additional information and a recommendation.”

DeLuca said impressed him about the presentation was how the ROI could determine the bottom line for special events regardless of their size. For example, a rather small soccer tournament could generate more revenue that a larger one-day event that attracts day-trippers, for example.

“That was eye-opening for me,” he said. “Some smaller special events bring in as much as larger ones in terms of revenue to the town.”

With that said, the council voted unanimously to approve the ROI and make its implementation date Nov. 1. From the beginning, Miller called it Return on Investment 1.0 and said it could be tweaked and adjusted in the future to provide even more detailed information about special events.

“We need to start field testing this to refine the data,” he said. “As we refine the data, it will give you more confidence in the decision-making process.”