City of Culver City, California
Redevelopment Agency Agenda Item Report
RECOMMENDATION:
Staff recommends the Culver City Redevelopment Agency receive and file an
update regarding Pacific Theatres Performance for Fiscal Year 2005-2006
BACKGROUND:
In March 2006, staff brought forward an update regarding performance for the first
half of Fiscal Year 2005/2006. Per the agreement with OliverMcMillan, the Agency
does not receive the cash flow report until approximately two months after the actual
performance month. On August 7, staff received the report for June 2006.
In keeping with the same format as the previous update, an annual summary report
highlighting the performance for Fiscal Year 2005-2006 (Exhibit A) as well as the
monthly cash flow for the year (Exhibit B) have been attached. This report highlights
the total revenues received vs. the projections included in the financial analysis that
was used by the Agency to determine whether to proceed with the project. The
financial analysis included projections of attendance, ticket revenues, concession
revenues, operating costs and repayment of the Agency contributions to the
theatres’ construction costs (“Agency Loans”).
In considering this data, it is important to understand that the Agency loan
repayment schedules included in the DDA (Exhibit C) are materially different from
the repayment projections provided in the financial analysis. Specifically, the
financial analysis recognized that the theatres’ revenues would be low during the
initial stabilization period, and that these revenues would increase over time.
Comparatively, the repayment schedules in the DDA are based on fixed monthly
payments, and any shortfalls are carried over and paid as theatre revenue is
Meeting Date: September 18, 2006 Item Number: C4
AGENDA ITEM: Receive and File an Update Regarding Pacific Theatres
Performance for Fiscal Year 2005-2006.
Contact Person/Dept.: Elaine Gerety
Warner
Phone Number: (310) 253-5777
Fiscal Impact: Yes [X] No [] General Fund: Yes [] No [X]
Public Hearing: [] Action Item: [] Consent Item: [X] Attachments: [X]
Public Notification: Master Notification List (9/12/06)
Department Approval:
Susan Evans (09/06/06)
Exec. Director Approval:
Jerry Fulwood (09/13/06)
City Controller Approval:
Marlee Chang (09/13/06)City of Culver City, California
Redevelopment Agency Agenda Item Report
produced. This structure was adopted to preclude a situation where the Agency
would be required to share cash flows with OM prior to receiving sufficient revenue
to fully amortize the Agency Loans.
DISCUSSION:
The current operating results indicate that the theatres’ annual performance is on-
track and has exceeded the financial projections that were prepared before the
theatres were constructed. As of June 30, 2006 the Agency has received a total of
$978,057 in revenues, which has exceeded the projection by $409,985. With the
Agency completing its third year in operation, staff has requested that an updated
projection for future theatre performance be developed. This projection will require
significant market study and cooperation with the Pacific Theaters and will include
the potential impact from two new theater developments in the vicinity.
FISCAL ANALYSIS
No activity associated with this item.
ATTACHMENTS:
Exhibit A – Annual Performance Comparisons – Revenues: Actual vs. Projected
Exhibit B – 2005-2006 Quarterly Cash Flow
Exhibit C – Overview of DDA Deal Points
MOTION:
That the Culver City Redevelopment Agency:
Receive and file an update regarding Pacific Theatres Performance for Fiscal Year
2005-2006.
City of Culver City, California
Redevelopment Agency Agenda Item Report
MEETING DATE: 9/18/06
AGENDA ITEM: Receive and File an Update Regarding Pacific Theatres
Performance for Fiscal Year 2005-2006.
ATTACHMENTS
Page
Exhibit A — Annual Performance Comparisons 1
Revenues: Actual vs. Projected
Exhibit B — 2005-2006 Quarterly Cash Flow 2 - 3
Exhibit C — Overview of DDA Deal Points 4SUMMARY TABLE
NET AGENCY REVENUE
PACIFIC THEATER -12 PLEX
CULVER CITY, CALIFORNIA
Actual Projected Variance
1. Theater Opening Through June, 2006 $2,499,184 $1,664,929 $834,256
II. Fiscal Years
2003/04 $666,977 $541,359 $125,618
2004/05 $847,802 $555,497 $292,305
2005106 $984,405 $568,072 $416,332
Prepared by: Keyser Marston Associates, Inc.
File name: July 05 - June 06_Pacitc.xls; Summary; 813112006TABLE 1
MONTHLY CASH FLOW
PACIFIC THEATER • 12 PLEX
CULVER CITY, CALIFORNIA
First Quarter
Second Quarter
Third Quarts
07/01105
08/04/05
08/05/05
09/01/05
09102/05
09/29/05
09/30/05
11/03(05
11/04/05
12/01/05
12/02/05
12/29/05
12/30/05
02/02/06
02/03/06
03/02/06
03/03/06
03/30/06
03/31/06
05/04/06
,
05/05/06
06/01/06
06/02/06
06/29106 Total
$759,152 $461,359 $399,833 $519,637 $668,966 $629,180 $566,979 $399,212 $390,862 $611,969 $688,437 $710,920 $6,806,506
$469,652 $299,089 $263,102 $326,406 $447,929 $379,190 $376,775 $273,424 $307,777 $404,292 $469,853 $481,655 $4,479,144
83,603 54,223 19,438 413,368 58,783 68,123 64,672 41,616 13,889 59,199 613,048 76,614 654,576
1.786, 1 786 1,786 1,786 1,786 1.786 1,786 1 786 1,786 1,786 1,786 1.788 21,432
$555,041 $355,098 $284,326 $376,560 $506,498 $449,099 $443,233 $316,626 $323,452 $465,277 $539,687 $540,055 $5,155,152
$204,111 $106,261 $115,507 $143,077 $162,468 $180,081 $123,746 $82,3136 $67,410 $146,692 $148,750 $170,865 $1,651,354
$10,000 $10,000 $10,000 $10,009 $10,000 $10,090 $10,000 $10,000 $10,000 $10,000 $10,009 $10,000 $120,000
3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000
10,000 10.000 10,000 10 000 10.1300 10 ODO 10 01)0 10.000 10,000 10,000 10.000 10,000 120.000
$23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $276,000
$1,773 ($17,361) $3,449 $38,691 $17,097 $22,679 $129 ($8,276) ($26,850) $5,494 $3,885 ($10,791) $29,820
$24,773 $5.639 $26,449 $61,691 $40,097 $45,579 $23,129 $14,726 ($3,860) $28,494 $26,885 $12,209 $305,820
$179,338 $100,622 $89,058 $131,386 $122,371 $134,502 $100,617 $67,661 $71,260 $118,198 $121,865 $158,656 $1,345,534
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
$179,336 $100,622 $89,056 $81,386 $122,371 $134,502 $100,617 $67,661 $71,280 $118,198 $121,865 $158,656 $1,345,534
I. Gross Income
II. Cinema Expenses
General
PacMc Management Fee
Cinema Loan Repayment to Agency
Total Cinema Expenses
III. Net Operating Income
IV. Other Expenses
Property Tex
CAM/Insurance
Capital Reserve
Total Cinema Expenses
V. Accrual to Cash Accounting Adjustments
VI. Total Other Expenses & Accounting Adjustments
VII. Current Period Net Cash Flow
VIII. Negative Cash Flow Repayment to OM
IX. Avails* Theater Cash Flow
Prepared by: Keyser Marston Associates, Inc. 8/31/2006
File name: July 05- June 06_Pacific.)ds; Detail Cf Page 1 of 3TABLE 2
MONTHLY CASH FLOW DISTRIBUTION
PACIFIC THEATER- 12 PLEX
CULVER CITY, CALIFORNIA
First Quarter
Second Quarter
e
07/01105
08/04/05
$179,338
08/05/05
09/01/05
$100,622
09/02/05
09129105
$89,058
00/30105
11/03/05
$81,386
11/04/05
12/01/05
$122,371
12/02105
12/29/05
$134,502
12/30/05
02/02/06
$100,617
02/03/08
03/02/08
$67,861
03/03/06
03/30/06
$71,260
ammo
05/04/06
$118,198
05/05/06
06101I06
$121,865
06/02/06
06129106
$158,656
Total
$1,345,534
$11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $135,600
0 0 0 0 o o a o 0 0 a o a
$11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $135,600
$16,413 $15,413 $16,413 $15,413 $16,413 ;15,413 $16.413 $15,413 $16,413 $16,413 $16,413 ;16,413 $196,961
$4,187 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $50,000
0 0 o a o o 0 0 o o o 0 o
$4,187 $4,167 $4,167 $4,167 $4,187 $4,167 $4,167 $4,167 $4,167 $4,167 $4,187 $4,167 $50,000
$147.458 $68,742 $57,178 $49,606 $90,491 $102,622 $68,737 $35,781 $39,380 , $86,318 $89,085 $126,776 $962,973
$10,624 $10,624 $10,624 $10,624 $10,824 $10,624 $10,624 $10,624 $10,624 $10,624 $10,624 $10,624 $127,485
0 0 0 0 o a 0 o a o a 0 a
$10,824 $10,624 $10,624 $10,624 $10,624 00,624 $10,624 ;10,624 $10,624 $10,624 $10,624 $10,824 $127,485
$72,615 $72,615 $72,615 $72,615 $72,815 $72,615 $72,615 $72,615 $72,615 $72,615 $72,615 $72,615 $671,385
779,635 715,416 729,914 755,975 789,708 782,457 763,074 777,576 825,035 868,894 865,815 859,069 9,512,568
$136,834 $58,118 $46,854 $38,882 $79,867 $91,998 $58,113 $25,157 $28,766 $75,694 $79,351 $116,152 $835,467
$147,455 $68,742 $57,178 $4amos $90,491 $102,622 $68,737 $35,781 $39,380 $86,318 $89,965 $126,776 $982,973
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0
$0 $0 $0 $0
$0 $0 $0 $o $o $0
I. Available Theater Cash Flow (See TABLE 1)
II. Threshold Amount Payment to OM
Scheduled Amount
Shortfall to be Carried Over Without Interest
Actual Payment
Ill. Tier 1 Rent (Pd to Agency Used for OM $1.2 m note)
IV. Mananement Fee to OM
Scheduled Amount
Shortfall to be Carried Over Without Interest
Actual Payment
V. CF Available for Debt Svc & Distribution
VI. Debt Service on Anency Fundine
$ta MILLION AGENCY LOAN TIER 2 RENT
Scheduled Amount
Shortfall to be Carried Over Wthout Interest
Actual Payment: Tier 2 Rent
$11.5 MILLION AGENCY LOAN TIER 3 RENT
Scheduled Amount
Shortfall to be Carried Over Without Interest
Actual Payment: Tier 3 Rent
Total Debt Service on Agency Funding
VII. Cash Flow Available for Distribution
V111. Agency Share of CF @ 75% (Tler 4 Rent)
Prepared by: Keyser Marston Associates, Inc. 8/31/2006
File name: July 05 - June 06 PectlicAs: Detail Cf Page 2 of 3First Quarter
Second Quarter
07/01105
08/04/05
08/05/05
09/01/05
09/02/05
09/29/05
09/30/05
11/03105
11/04/05
12/01/05
12102105
12/29/05
12/30/05
02/02/06
02103106
03/02/06
03/03/06
03/30/06
03/31/06
05/04/06
05/05/08
06/01/06
06102/06
06/29106 Total
$1,786 $1,786 $1,786 $1,786 $1,788 $1,786 $1,786 $1,786 $1,786 $1,716 $1,786 $1,786 $21,432
$16,413 $16,413 $18,413 $16,413 $16,413 $16,413 $16,413 $18,413 $16,413 $16,413 $18,413 $16,413 $196,981
$10,624 $10,624 $10,824 $10,624 $10,824 $10,824 $10,624 $10,624 $10,624 $10,624 $10,624 $10,624 $127,485
$136,834 $58,118 $46,554 $38,882 $79,667 $91,998 $56,113 $25,157 $28,758 $75,694 $79,361 $116,152 $835,487
IQ Il II $0 E la Vi $ill $0 I IQ PI $ 0 I gl
$186,667 $86,941 $75,377 $67,705 $108,890 $120,821 $86,936 $53,980 07,579 $104,517 $108,184 $144,975 $1,181,386
$16,413 $16,413 $16,413 $16,413 $15,413 $16,413 $16,413 $15,413 $18,413 $16,413 $16,413 $16,413 $196,951
$149,244 $70,528 $58,964 $61,292 $92,277 $104,408 $70,523 $37,567 $41,188 $88,104 $91,771 $125,562 $984,405
Fourth Quarter
TABLE 3
SUMMARY OF AGENCY REVENUE
PACIFIC THEATER 12 PLEX
CULVER CITY, CALIFORNIA
REVENUE
I. Cinema Loan Repayment to Agency
11. Tier 1 Rent (Pd to Agency Used for OM $1.2 m note)
III. Actual Payment: Tier 2 Rent
IV. Actual Payment: Tier 3 Rent
V. Agency Share of CF 41) 75% (Tier 4 Rent)
Total Agency Revenue
EXPENSES
I. OM Construction Contribution Note Obligation
NET AGENCY REVENUE
Prepared by: Keyser Marston Associates, Inc. 8/31/2006
File name: July 05- June 06_Pacitic.9s: Detail Cf Page 3 of 3EXHIBIT C
Pacific Theatres Loan Repayment Hierarchy
Repayment of the Agency's expenditure and OM's officers' loan will be made from
Theater revenues once operational expenses and the Threshold Amount (defined below)
have been deducted. Notwithstanding, if remaining revenues are not available to fund
the "First Tier" payment (as defined below), the Agency is obligated to make that
payment from other available funds. The payment hierarchy is as follows:
Purpose Amount (annual)
Threshold Amount Compensation to OM for expenses of
actual money, efforts and energies
during the extended time for the Town
Plaza Project approvals due to
extensive revisions, threatened lawsuits
and initiative election.
$135,600 for 10 years.
($11,300 scheduled
monthly payment)
First Tier Repayment of principal and interest to
OM's officers for the $1.2 million loan to
construct one of the additional two
Theater screens.
$196,961 for 11 years.
($16,413 scheduled
monthly payment)
Second Tier Repayment of principal to Agency for
the $1 million to construct the additional
Theater screen.
$127,476 for 11 years.
($10,624 scheduled
monthly payment)
Third Tier Repayment of principal to Agency for
initial $11.4 million to construct a ten
screen theater.
$871,380 for 30 years.
($72,615 scheduled
monthly payment)
Fourth Tier Additional compensation to Agency and
OM if additional revenues remain after
all of the payments described above
has been satisfied.
Agency to receive
75% of the remaining
funds and OM to
receive 25%.
Loan Re-payment vs. DDA schedule
The financial analysis utilized in the Agency's decision making process indicated that it
will take the entire loan period to realize full re-payment for the Agency loans. It is
important to note that the scheduled amount in the DDA does not reflect performance
standards, but were determined to set equal payments over the loan period and fully
amortize Agency Loans prior to a profit Sharing scenario described in the Fourth Tier.
The financial analysis recognized that 100% of the schedule debt service payments on
the 11.4 million (Third Tier) may not be achieved until the 12th year of operation.