St. Johns County may soon turn over St. Augustine Amphitheatre and Ponte Vedra Concert Hall operations to a yet-to-be-created nonprofit organization. The move is being considered to ensure the venues’ success and alleviate a significant burden on county departments.
The proposal arose out of a discussion during the April 19 County Commission meeting concerning possible alternatives in the way the venues are being operated. Depending upon what accounting approach is applied, they are either a financial success or failure, though there are other concerns as well.
Currently, the venues operate under the county’s Cultural Events Department.
In May, the commission named five people to a temporary committee to advise the board. The Amphitheatre and Concert Hall Advisory Committee was tasked with providing ideas, suggesting changes and exploring options regarding operations while maximizing the venues’ economic benefits and ensuring accountability to taxpayers.
The committee conducted exhaustive interviews with stakeholders and presented its recommendation during the Sept. 6 commission meeting.
The board directed the committee to put together a detailed proposal and business plan to transform the Cultural Events Department into a nonprofit that would act as a collaborative contractor to the county. This public-private partnership would presumably protect the community’s will while giving the venues a freer rein.
A valued asset
The amphitheater and concert hall routinely attract major musical acts while remaining available for community events. In addition to the elevated quality of life they offer local residents, they bring in thousands of tourists who spend money on lodging, restaurants, shops and tourist activities.
In fact, when hotel stays, ancillary spending and collected bed taxes are tabulated, the committee found that, in fiscal year 2022, the venues have had a total economic impact of nearly $40 million on St. Johns County.
In addition, the amphitheater has been ranked number one in North America and number two in the world. The concert hall, too, has drawn many accolades.
So, what’s the problem?
The committee identified three areas that affect how the venues' finances are judged.
Perhaps the biggest of these is that, operating under the county, they are subject to governmental accounting practices, as opposed to those used in business.
For instance, the $3 maintenance fee collected for each ticket sold would be shown as revenue under the business model. Over fiscal years 2016-2021, that would have generated $3,922,508 and the venues would have shown a net $1,749,714 profit.
However, under the governmental model, the fee would not be counted among operating revenue, so the venues would have shown a net $2,172,794 loss.
Another area of concern is how capital maintenance is recorded. In those same six years, capital improvements equaled $1,125,664. A business would spread the cost over the expected life of the asset. But governmental modified accrual basis accounting systems do not amortize capital investments.
In addition, as the result of a full-cost allocation plan conducted every three years, the Cultural Events Department would be billed $569,976 annually for services rendered by other departments. However, these services don’t meet the needs of Cultural Events, and a business would seek out other avenues at a reduced cost.
Moving the venues to a nonprofit would minimize friction between departments and relieve the burden on the Clerk of Courts office, which handles 19,000 transactions each year for Cultural Events.
Also, a nonprofit organization would have the flexibility to make decisions very quickly to adjust to rapidly changing conditions like those found in the entertainment industry. Government can’t act that quickly.
The nonprofit would also be able to pursue grants and other revenue sources not available to it as a department of the local government.
And it would help ensure retention and development of staff.
In his presentation before the commission, committee Chair Jerry Wilson identified this as the most troubling aspect of the current arrangement.
“We’ve lost several talented people because they’ve gotten frustrated with the system and have chosen to go other places where they can have more flexibility,” he said.
Not everyone was won over by the committee’s presentation. A couple of members of the public raised concerns about a possible loss of transparency and accountability.
Commissioner Henry Dean proposed that the county conduct an annual audit of the nonprofit if it is approved.
