That's a very fair question, and one that we asked ourselves internally as we prepared our strategic plan in January. The fundamental principle in our plan and in our presentation to GIC earlier this month is that "The Status Quo is Not An Option". Every organization needs to reinvent itself on a regular basis, and we clearly needed a new model if we were to earn the privilege of continuing to manage these iconic venues. The easy part of the answer is that we have an amazing team of skilled veterans and new faces. They are passionate about customer service and our new model. Our client and patron survey feedback clearly demonstrates that the team is consistently delivering outstanding convention and entertainment experiences.
In my recent presentation at GIC I outlined our proposed governance model, eliminating HECFI as a separate organization and having it integrated within the City to optimize economic development through a closer affiliation with Culture, Tourism, and Ec. Dev.. This allows us to be fully aligned with community and private sector partners to create the best balance of programming and revenue generation. Each key area would have an Advisory Committee to guide the direction of the organization. A major part of our mandate has always been economic stimulation; our contribution has been estimated as high as $190M annually, but even if it were half that it is a major contributor to the City's hotels, restaurants, retail, and other service industries.
A critical piece to the new plan is the reduction of subsidy's provided by the City to run the venues. To clarify, the City's investment, should be broken in to 3 portions: Capital, Utilities, and Operating Subsidy. The RFP reponses have confirmed that for the most part the City will be required to continue support for Capital, and for Utilities regardless of which group manages the facilities going forward. These costs represent more than half of the annual total costs of the facilities. It really nets down to the annual operating savings that bidders can bring to the table and the real savings to the City and taxpayers. We have a new streamlined organization in place (from 65 to 53 full time union and non-union employees), and have achieved significant cost containment which will result in a reduction to taxpayers of approximately $1.7M since 2010. Our plan includes a further reduction of $1.3M over the next 5 years.
City staff are compling final bid comparisons to determine the real net savings to the City compared to the presentations made at GIC. For example, some of the costs currently assigned by the City to HECFI such as the approximately $450,000 annually for IT, Finance, HR, and Legal services will not be saved if a 3rd party takes over the facilities as these costs are made up of a very small portion of several people's jobs, therefore there will be no staff reductions or savings realized by the City.
We are in a unique position in Canada as the only City with 3 very significant venues downtown under one management team. That gives us the flexibility to attract business that uses 2 or more venues simultaneously e.g. Country Music Week, large conferences, and trade shows. These events would otherwise not come to Hamilton. It also allows us to minimize 'dark nights" by having a variety of venues to book events and entertainment based on size or space availability. For example we book up to a dozen concerts per year in the Convention Centre that we would otherwise pass on. We regularly have events booked in all venues on a given night bringing thousands of people to the downtown area. The single operator model provides the most flexibility to maximize events.
City success stories of newly opened hotel rooms, the addition of the McMaster Medical facility, new major employers in the City, all day GO service, and the development of new retail and condominum facilities downtown, bodes very well for our future revenue growth. Our plan also includes an expanded revenue model and an aggressive exploration of partnership opportunities to refresh the facilities. I believe this aggressive new model will put us in a favourable position when compared apples-to-apples with the proponents' net savings and benefits to Hamiltonians. As a City managed solution it also puts us in the optimum position to serve our community's interests, and to leverage further revenue generation and cost reduction opportunities through synergies with existing City departments and agencies. As a result, our inclusion as a City Department will lead to savings for the taxpayer and will ensure that the interests and needs of City Council are paramount.
I am extremely proud of the progress that the team has made to date and their complete support for "Status Quo is Not An Option". I am very excited about the prospect of executing our plan as a City managed solution following the upcoming discussions at GIC and Council in September.