The Sunset Strip Business Association’s board of directors today authorized Executive Director Todd Steadman to move forward with an agreement to repay a loan of $150,000 from the Nederlander Organization at a rate of $10,000 a month. The board also agreed to authorize Steadman to finalize a deal in which Nederlander will receive 30 cents on the dollar for $562,690 it is owned by the Sunset Strip Music Festival LLC (SSMF), an entity formed by the SSBA.
The financially troubled organization, which has $1.7 million in debt, also adopted a budget for the 2015-2016 fiscal year that reduces its assessments on its members by anywhere from 65 to 20 percent of the previous assessment. Large nightclubs and bars and restaurants will see their assessment reduced by 65 percent. Smaller bars, hotels and small restaurants and liquor and convenience stores will see their assessment reduced by 60 percent. Retailers will see their assessment decline by 20 percent.
The West Hollywood City Council is likely to consider the proposed budget at its Aug. 17 meeting. The SSBA is a business improvement district, an organization that can be formed by businesses representing a majority of the revenue in a particular area to provide marketing, security and other services. The City of West Hollywood collects assessments on businesses in the district and gives the money to an entity chosen by the City Council, in this case the SSBA, to manage the district.
The board decided not to dissolve the bankrupt SSMF and voted to forgive its debt of $564,000 to the SSBA. Board members reasoned that the Sunset Strip Music Festival, despite its losses of nearly $2 million in the past three years, had value as a brand that possibly could be used in the future. Mikeal Maglieri, owner of Whisky A Go Go, the famous rock club and the Rainbow Bar & Grill, argued that the SSMF shouldn’t be dissolved until it is able to repay more than 30 contractors who participated in last September’s music festival. “I don’t care how long it takes — we pay down our debt to our 30 odd creditors,” Maglieri said. “Why would anyone else want to work with us if we don’t pay our debts?” The board also voted against dissolving the SSBA.
The debt to Nederlander, which managed the festival, is owed by the SSBA, which gets its revenue both from assessments on its members and from payments by Jack Daniels to advertise on banners on city light poles along the Sunset Strip. It is revenue from the banners that would be used to repay the Nederlander loan. But the bankrupt SSMF is the debtor to which the other creditors would have to turn for payment. Maglieri is one of those creditors, having established a $250,000 line of credit for the SSMF. The board, with Maglieri absent for the discussion, considered authorizing annual payments to him of $7,500 to cover interest on the line of credit and to re-evaluate the status of the loan in 12 months. Board members eventually decided, however, to take no action on that matter.
The SSBA budget approved by the board projects that 59 percent of its total revenue of $613,000 will come from advertising on the banners on city-owned light poles. The other major revenue source is assessments on businesses, projected to generate $205,000. The largest portion of the budget, $225,000, would be spent on providing security through a contract with Block-by-Block. While such security previously was provided seven days a week, the approved budget eliminates the Block-by-Block “security ambassadors” on Mondays and Tuesdays.