HIDALGO — The City Council terminated the State Farm Arena’s concessions contract Wednesday — dumping Hidalgo Festivals Inc., a company headed by City Councilman Rudy Franz — and approved a new, short-term agreement for the 6,800-seat stadium.
Starting Friday night, Pennsylvania-based SAVOR will handle the arena’s food and beverage sales. Hidalgo Festivals workers will keep their jobs, said arena General Manager Eric Blockie, and concessions will operate normally during Friday’s junior hockey matchup between the RGV Killer Bees and the Lone Star Brahmas.
“We are in the process of terminating HFI’s — terminating their agreement with the State Farm Arena and moving on to SAVOR right now,” Blockie told the City Council on Wednesday. “And it’s a smooth transition, so I don’t see any problems down the road.”
The City Council terminated the Hidalgo Festivals concessions contract Wednesday, but hadn’t actually inked a long-term deal with SAVOR. Until Hidalgo and SAVOR finalize the proposed five-year deal, they’ll operate under a memorandum of understanding.
“We should have the majority of it done here in the very near future,” Blockie said, and attorneys have reviewed final drafts.
A division of SMG Food and Beverage, SAVOR runs concessions at the Irving Convention Center at Los Colinas, the American Bank Center in Corpus Christi and Ford Park in Beaumont.
SAVOR recently applied to the Texas Alcoholic Beverage Commission for two mixed beverage permits, according to a legal notice published in The Monitor. Until SAVOR obtains mixed beverage permits for the State Farm Arena, the company will serve alcohol under a catering permit, said City Manager Joe Vera III, avoiding any disruption.
Hidalgo Festivals had handled the State Farm Arena’s concessions for years under an agreement with the Texas Municipal Facilities Corp., a city-controlled management corporation. In exchange for exclusive concessions rights, Hidalgo Festivals agreed to pay 35 percent of gross receipts to the Municipal Facilities Corp.
While ostensibly an independent nonprofit, Hidalgo Festivals often operated like an extension of the Municipal Facilities Corp. or city government, which once handled the organization’s payroll. Businessman Rudy Franz headed Hidalgo Festivals. Both Rudy Franz’s nephew, former Mayor John David Franz, and his sister-in-law, Siglinde Franz, served on the City Council.
So when Hidalgo Festivals couldn’t meet the 35 percent requirement, neither the Municipal Facilities Corp. nor the City Council moved to terminate the contract.
By March 2012, Hidalgo Festivals owed the Municipal Facilities Corp. more than $851,000, according to city records. City Councilman Guillermo Ramirez recently estimated the debt at roughly $1.2 million. It’s unclear whether or not Hidalgo will ever collect the money.
Recently, though, a political rift prompted the City Council to re-examine the Hidalgo Festivals contract. Ramirez started hammering Rudy Franz, who joined the City Council in May 2012, and demanding Hidalgo Festivals pay the debt.
Amid the controversy, Hidalgo started soliciting new concessions proposals.