Wichita unlikely to profit when it privatizes events and alcohol in new Naftzger Park
Wichita City Hall is poised to turn over control of events and alcohol in its newest park to a private operator who will likely keep all of the profits, city documents show.
The City Council is scheduled to vote Tuesday on a contract to give the operators of the Wave venue in Old Town the option of closing off general access to the renovated Naftzger Park and charging admission to outdoor concerts or other events they schedule.
In addition, “Wave will have first right of refusal for coordinating alcohol service for all Naftzger Park events, including events that it does not host,” according to a city staff report recommending approval.
City Manager Robert Layton said the Wave operators have expertise at booking, promoting and running concerts, which isn’t the city’s wheelhouse. It also relieves the city of the responsibility and liability of selling alcohol to the general public.
The city will retain control of most park activities and it will be open to the public most of the time, he said.
Some events will be free to the public, but with paid VIP access to areas closest to the stage where alcohol could be served.
A financial projection attached to the plan envisions 20 Wave events a year.
Those would likely be concentrated around major concerts or sporting events at the nearby Intrust Bank arena and during fair-weather months when it’s less risky to plan an outdoor show.
The city will retain the right to reject events proposed by Wave, Layton said.
Under the proposed contract terms, Wave will receive all profits from the park events up to $50,000.
If profits exceed $50,000, the city would get a 5% share of any profits between $50,000 and $150,000 and 10% of anything above $150,000.
The city is unlikely to actually receive any income from Wave’s management of park events, according to the financial estimate.
That document projects the events will generate total revenue of $244,000, minus $229,200 in expenses, for a total profit of $14,800, well below the $50,000 threshold where Wave would have to share profits with the city.
Layton said he can’t predict how much money might be generated by the events. The initial term is for one year so adjustments can be made once the park and the Wave establish a track record, Layton said.
If the contract loses money, Wave and the city would split the loss.
Losses up to $10,000 would be split 85% to Wave, 15% to the city.
Losses between $10,000 and $25,000 would be split 75% Wave and 25% city.
Losses from $25,000 to $50,000 would be split evenly and Wave would bear exclusive responsibility for any losses of more than $50,000.
One potential glitch that surfaced at Friday’s council agenda review was how remote ticket sales would be handled for sales tax purposes.
It’s an important consideration because there will be an extra two percent sales tax on purchases made at the park and in the neighboring businesses which will help pay for the park maintenance.
Council members were concerned that the Wave might not have to pay sales tax on tickets sold at its main location in Old Town. Layton said that would be considered revenue generated at the park and subject to tax, but he would review the document before Tuesday and spell that out if necessary.
The park, on the southeast corner of Douglas and St. Francis, is under construction.
Formerly a passive park designed around a gazebo and water fountain, it is being transformed into a more active gateway for the nearby Intrust Bank Arena, open space primarily for tenants of the adjacent apartments in the former Spaghetti Works building, and the entryway for new businesses built to the east edge of the park.
The park renovations include:
▪ A dog run primarily for use of apartment tenants at the Spaghetti Works apartments and the Eaton Place apartments just west of the park.
▪ An open area to provide seating space for park events.
▪ Evergy Plaza, a stage area named for the public utility company formed in last year’s merger of Westar Energy and Kansas City Power & Light.
▪ A large video view screen that can be used in conjunction with park events and for advertising and promotions.
The $3.9 million renovation project is funded with $2.5 million in city funds, including $1 million borrowed through general obligation bonds and $1.5 million borrowed against future property tax revenues from the new businesses adjacent to the park.
The remaining $1.4 million comes from a sponsorship agreement with Evergy.
This story was originally published February 3, 2020 at 5:01 AM.
