Anchorage administration proposes 18-month extension, $1 million increase for Alaska Center for the Performing Arts; funding plan would reassign surcharge and M

Municipal administration told the Anchorage Assembly at a work session that it plans to seek assembly approval to extend the management agreement with the Alaska Center for the Performing Arts through June 30, 2027, increase the management fee for calendar year 2026 to about $2.687 million and fund the increase through a mix of ticket surcharge revenues, reprogrammed tourism-related bed taxes and Municipal Light & Power (MLP) proceeds used to retire a 2005 roof bond.

Why it matters: The administration said the package is designed to keep the Performing Arts Center (PAC) operating through a transitional 18-month period while the city and the PAC explore a longer-term, sustainable operating model. Without additional funding, staff warned the facility could face operational shortfalls tied to higher post‑COVID costs and an expensive Broadway production presented in 2023 that materially increased expenses.

At the work session Chief Administrative Officer Bill Fawzi and venues director Renee Stewart reviewed the proposal and the PAC’s audited financial history. Fawzi told the Assembly the current contract—executed in 2015 and otherwise set to expire at the end of the year—would be extended to June 30, 2027, and that the proposed management fee would rise by roughly $1 million for 2026 (to $2,687,502.74) and be reduced to $1,343,751.37 for the first half of 2027 (prorated). Fawzi said the municipality’s management fee in 2025 was “just under $1,600,000.”

Fawzi described how the PAC’s operating model historically combined a municipal management fee, earned revenue (ticket sales, rentals, concessions) and philanthropic support. He said the PAC’s reserve account for capital needs is funded by 10% of gross rentals and year-end surpluses, and that those reserves are currently inadequate for the building’s capital problems. “We don’t want the PAC to go dark,” Fawzi said, describing the administration’s priority to keep the facility open while a longer-term plan is developed.

How administration would pay for it: The administration proposed a four-part package: (1) approve the management agreement extension and fee increase; (2) approve a resolution to use MLMP proceeds to defease (pay off) the PAC’s 2005 roof bond so the $3-per-ticket surcharge that now services that bond can be reprogrammed; (3) bring an ordinance to amend the code to permit use of the $3 surcharge for the PAC management agreement rather than bond repayment; and (4) program roughly $750,000 per year of tourism-related bed-tax funds (from the 12% room tax) to fill remaining gaps for the 18-month period while the city and PAC negotiate a sustainable long-term arrangement. The administration said it does not intend to cover the PAC increase from general government operating funds.

Fawzi explained how the $3 ticket surcharge has varied in recent years: near zero during the 2021 post‑COVID period, about $143,000 in 2022, $263,000 in 2023, more than $500,000 in 2024, and an estimated ~$300,000 for 2025. He said reprogramming the surcharge requires an ordinance change and that MLMP proceeds would be used to retire the 2005 roof bond so the surcharge could be redirected. The administration characterized the MLMP payoff as neutral from a debt‑service savings standpoint — effectively “defeasing the bond at cost” — but said it would confirm the public finance analysis.

Budget and operations details: Administration staff said that when Broadway productions are removed from the PAC’s audited results, the organization reports a structural operating shortfall roughly in the mid‑hundreds of thousands of dollars (administration cited about $556,100). That non‑Broadway shortfall, plus higher security, utility and compensation costs, explains most of the requested increase, staff said. The administration allocated the proposed new funds approximately as follows: about $580,000 to eliminate the non‑Broadway operating loss, $150,000 toward general repairs and vandalism response (which would first address capital needs and spill over to the reserve if not fully used), roughly $100,000 for CPI/compensation adjustments (about a 4% increase on current payroll), $100,000 for utilities and security (on a baseline of about $400,000), and roughly $104,000 for other nondiscretionary cost increases.

Questions from Assembly members focused on comparative benchmarks, the capital budget, and whether early payoff of the 2005 roof bond produces net interest savings. Assembly member Myers asked, “First, have you calculated the cost savings related to debt service for the payoff?” Fawzi said the memorandum indicates there is not an obvious debt‑service savings and that administration would confirm the public finance analysis.

Next steps: Administration said it will present the management‑agreement amendment and the related resolution to the Assembly on the upcoming regular agenda and will follow with an ordinance to change the $3 ticket surcharge code language and with proposals for bed‑tax programming. Staff emphasized the plan is intended to be a time‑limited bridge: the city and PAC will negotiate a new long‑term contract during the next 18 months and explore operational synergies with Visit Anchorage and convention center management to seek revenue and efficiency gains.

The work session did not include a formal vote; the items were presented for Assembly consideration on the upcoming meeting agenda.