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Staff proposes 15% concession payment calculated on prior-year gross margin; projects $15,450 in FY26
Summary
Staff recommended changing the city's concession payment to 15% of the previous year's gross margin (sales less cost of sales, excluding taxes and gratuities) to align with ABC regulations; staff cited a FY26 target of $15,450 growing 3% annually to about $17,389.11 by FY30.
City staff recommended revising concession payment language in both operator agreements to match the City's interpretation of ABC regulations and to calculate the City's annual concession payment as 15% of the previous year's gross margin. "Sterling agrees to the city's recommendation to modify the contractual calculation methodology by specifying that the city's annual concession payment will equal 15% of the previous year's gross margin," Julia Estrada said.
Estrada told the committee that under the current agreement concession revenue targets are expected to increase at roughly 3% per year. She provided figures: "$15,450 for fiscal year 26, increasing by 3% all the way up to $17,389.11 by fiscal year, 30." Staff recommended that concession activity generated by both Sterling and the OPEC nonprofit be combined when evaluating the PAC's overall financial performance metrics.
