TITLE
Recommendation to receive and file the Queen Mary Capital Improvements Audit, and revisit Save the Queen's performance of capital improvements subsequent to its final benchmark deadline of December 31, 2010.
DISCUSSION
In November 2007, the City signed an agreement with Save the Queen (STQ) in which STQ agreed to make $5,300,000 of capital improvements to the Queen Mary through December 31, 2010 in exchange for the City's waiver of percentage rent under the lease.
The agreement requires STQ to complete these capital improvements in minimum increments over three years as follows:
Minimum Aggregate
Amount of Approved
Timeline Benchmarks Capital Expenditures
December 31,2008 $2,800,000
December 31,2009 $4,300,000
December 31,2010 $5,300,000
Our prior audit of the Queen Mary Capital Improvements Program, dated June 23, 2009, covered the first incremental period ending December 31, 2008. The attached audit, dated August 24, 2010, addresses the agreement's second incremental deadline, December 31, 2009, requiring the completion of an aggregate of $4,300,000 in capital expenditures. At the request of STQ, the City granted an extension of the December 31, 2009 deadline to March 31, 2010. Therefore, we verified the amount of capital expenditures made by STQ from January 1, 2009 through March 31, 2010 in accordance with the agreement.
According to our audit, STQ completed $2,017,000 of capital improvements during the period examined, bringing the total aggregate amount expended to $3,983,000 through March 31, 2010. While this is $317,000 less than their $4,300,000 obligation under the agreement, STQ continues to make significant progress towards completing capital improvements that clearly improve the visitors' experience and contribute to the preservation of the Queen Mary. As part of its attached response, STQ details additional renovations that have begun since the completion of our audit. It is their intentio...
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