Apr. 17--ALBUQUERQUE, N.M.--City officials again are considering privatizing the Albuquerque Convention Center -- but the private-vs.-public debate may well end up with an answer somewhere in the middle. 

The city is requesting estimates from private firms on the cost of taking over the center's management -- a plan endorsed by Jim Baca when he was mayor. 

At the same time, Mayor Martin Chavez has given convention center staff the go-ahead to come up with their own plans for improving operations. 

"I still think city employees can probably do just the same or better job as a private company," Chavez said. "Convention centers weren't designed to be in the black. That's one issue that's clear. If they come out even, they are doing OK." 

The private-vs.-public debate is fueled by a history of problems plaguing the 600,000-square-foot center. 

Operated by the city's Convention Center Department, the center now loses $1.2 million a year. 

The center has also suffered from revolving leadership, with five directors in four years; controversy over its food service contracts and theft of property -- both the city's and conventioneers'. 

And use of the center is far below what it should be. 

Allowing time for setting up, repairs and maintenance, a center is considered completely occupied at 70 percent, said acting center director Leonard Garcia. 

The Convention Center's utilization rate for fiscal 2001 was 26 percent. For this year, it is expected to be 27 percent, going down again to 26 percent in 2003. 

(The rate is calculated by adding up the square footage actually used during the year and then dividing that by 365.) Spectator Management Group, which manages convention centers in Salt Lake City, Denver and El Paso, says there is no industry standard for gauging occupancy. But "anything north of 60 (percent) is good, anything south of 50 (percent) needs work," said Thom Connors, vice president of operations. 

Baca's proposal to turn management over to a private company last year was opposed by union officials and eventually killed by city councilors. 

The city employees' union contends that if management is privatized, the city will lose control over the center's use and private companies will have higher staff turnover. 

"Privatization just doesn't work for certain functions like convention centers," said Joseph Chavez, formerly with the American Federation of State, County and Municipal Employees union. He is now an employee relations officer with the city. Last year, he provided Baca and city councilors with the union's arguments against privatization. 

Mayor Chavez expects to have responses in a few months from the requests for information from industry experts on the cost of privatization. 

The mayor also has created an advisory group with representatives of the Hispano Chamber of Commerce, the convention and visitors bureau and two Downtown hotels. The group meets almost weekly with Garcia and his staff to discuss ways to improve efficiency. 

Chavez said one effective model for center operations uses city employees but has tourism and hospitality industry people in management. Still, he is keeping an open mind. 

"We're trying to get as many options on the table as possible," he said. 

Regardless of who manages the convention center, the key issue is service, according to Mary Kay Cline, president and CEO of the Albuquerque Convention and Visitors Bureau, which markets the center. 

Excellent service helps bring more conventions and conventioneers, who in turn spend money at New Mexico restaurants, hotels and shops. 

The city views the center as an economic engine, Cline said. 

The 366 conventions held in Albuquerque last fiscal year generated $114,744,416 in economic impact for the private sector, according to the bureau's data. 

"Being service- and hospitality-oriented is the major consideration in terms of successful management," she said. 

The ACVB operates under a $3.1"million contract, funded by about 44 percent of the lodger's tax collected from hotels and motels. 

Cline said she gets mixed responses from clients about the center. 

"The issue is how well do we perform once the business is booked: the level of service, pricing, and does the facility meet customers' needs," she said. 

For example, a spokesperson for one convention in town in early March raved about the food service and the building but did not like how management made decisions about an on-site issue. The spokesperson also expressed doubts about security at the center. 

"Over the last couple of years, some meetings at the center have experienced theft of property," Cline said. 

Garcia said he is trying to improve service and efficiency through an approach called GEAR: Government Efficiency and Results, which streamlines core functions while outsourcing services now supplied by companies hired by center clients. 

Plans to improve the bottom line have been in the works for two years, he said. But the former administration would not allow changes to move forward. 

"The last administration had made up its mind to privatize completely and didn't want to follow the GEAR process," he said. 

Center staff already has been reduced from 57 to 42 over the past three years in anticipation of outsourcing such functions as audiovisual services and security, Garcia said. 

The goal is to make the government sector as efficient as the private sector so government can be competitive enough to bid on managing the center. 

"We have looked at the Convention Center like an onion, with core functions in the middle," Garcia said. 

Those core functions include: 

Engineering, such as making sure electrical, heating and cooling systems work properly; Operations that meet customers' needs, such as setting tables and cleaning during events; and Administrative support for those two functions, such as human resources and financing. 

The city would continue to handle these functions while making some changes. For example, Garcia has been taking a tip from Downtown hotels. 

"They break down the way they handle bookings and client services," he said. "We have the same people doing both functions. It hurts us in both areas." 

Meanwhile, Garcia plans to contract out several services, which would have a dual benefit to the city: Instead of paying to provide services to clients, the city would receive revenues from others providing services. 

"Taxpayers will save money and the facility will improve in the delivery of services," he said. "The GEAR process makes us competitive but keeps control of the facility, which belongs to taxpayers, in the hands of the taxpayers." 

Those services include decorating, event security, audiovisual equipment services and hiring a preferred provider of telecommunications. 

"At other centers and hotels, they get a percentage of that action," Garcia said. "We need to do the same thing here." 

Currently, exhibitors and meeting planners hire companies directly to provide services. The city does not receive any of that money. 

Under the new system, the city would contract with service providers. Customers would use one of those providers, and the city would receive a percentage of the revenues. 

Garcia estimates decorating fees alone could generate $50,000 to $100,000 a year, while audiovisual services could bring as much as $150,000. 

The center already contracts with a catering company and a maintenance company. But city employees, at one point, had to supervise a new, untrained graveyard-shift maintenance crew. Garcia said he plans to go with a company with better-trained workers that will do its own supervising, saving the city about $150,000. 

He is also spending $90,000 on an improved security system. 

He estimates the changes could reduce the center's budget from $3.8 million to $3.5 million. The city's portion to cover operating losses would also be reduced, from $1.2 million to $800,000. 

"That would be a historically low subsidy for the center," he said. "We are going in the right direction." 

The bureau and city have been in talks about increasing the bureau's duties at the center, but no concrete decisions have been made, Garcia said. 

Cline said her organization considered managing the center a couple of years ago. 

"We felt without changing our mission and structure, the things we were best suited to do were related to marketing and possibly some service aspects," she said. "That's not to say we couldn't seriously consider overall management and operation, but it would require some changes to our organization." 

She said the bureau has not taken a position on the best model for managing a convention center because it has not done in-depth research into the issue. Meanwhile, Garcia said the city wants to hire someone to concentrate on attracting more trade shows. 

The utilization rate could improve if exhibit halls were used more because they represent the largest square footage in the center, Garcia said. 

-----To see more of the Albuquerque Journal, or to subscribe to the newspaper, go to http://www.abqjournal.com 

(c) 2002, Albuquerque Journal. Distributed by Knight Ridder/Tribune Business News.