When concert promoter Goldenvoice started the Coachella Valley Music and Arts Festival 14 years ago, the event hemorrhaged money – and Goldenvoice teetered on the edge of bankruptcy.
At the same time, Coachella's hometown of Indio was prospering as the housing boom began to take off.
But during the past few years, the fortunes of Indio and Coachella have gone in opposite directions – and now Indio city leaders are tired of chopping budgets and are eager to capitalize on the music festival’s success.
How to best do that has been the source of considerable debate.
The most hated man in Indio?
A plumber by day and Indio city councilman by night, Ascencion "Sam" Torres said last summer he was prepared to become the most hated man in the Coachella Valley.
He very well may have achieved that goal. His offense? Proposing a 6 percent tax on Coachella tickets, which average $368.
“I didn’t look at these guys as the first source of money to buy sofas for city hall,” said Torres. “I looked at these guys as a way to maintain our city.”
Like many other California cities hit hard by the housing crisis, Indio has raised taxes and ordered steep cutbacks to stave off bankruptcy. In the past few years, the city’s laid off dozens of workers, including police and firefighters.
“We have gone through some hard times,” said Torres. “The real estate boom and bust, oh, my gosh, we were almost like Las Vegas. You grew by 25 percent from 2000 to 2007 – and then you saw the bottom drop out of the housing market.”
Coachella: The highest-earning music festival in the world
Sipping a beer on the 90-acre plus polo fields where crews are finishing building the stages for this year’s event, Torres says he looks at Coachella with a mix of awe and envy.
A festival that used to worry its checks would clear is now a cultural juggernaut and a cash cow, bringing tens of millions of dollars to its parent company AEG.
Coachella is far and away the highest-grossing festival in the world, according to Billboard. The 80,000 music fans who attend the show make the festival grounds more populous than Indio itself.
“For 12 years, we collected nearly nothing except reimbursement for costs, so we helped grow up the music festival,” said Torres.
But despite that early support and the fact the festival basically shuts down his city for two weeks a year, Torres says Indio doesn’t get to share in the wealth.
RELATED: Coachella 2013: What you need (Line-ups, venues, maps)
It doesn’t help that most attendees overnight in more affluent cities like Palm Springs or Indian Wells and are whisked to Coachella on shuttle buses, or they camp on the polo fields.
“Looking at this concert and their business model, I said, ‘We had to step up to the plate like a business-minded community,’” said Torres. “Everyone says government has to be more like business, but when a government acts like a business, everyone says, ‘What’s wrong you?' You’re supposed to be like Mother Teresa and sponsor these events and get nothing in return.”
Goldenvoice – known for its secrecy – refused to comment for this story.
When Torres brought the idea of a bigger cut of the Coachella pie to the Indio city council, his council colleagues wouldn’t bring the proposal to a vote.
Torres didn't leave it there. He said he would bring the ticket tax directly voters – and that's when Goldenvoice’s president, Paul Tollett, threatened to leave Indio after this year’s festival.
That comment prompted panic and national headlines.
Indio’s city manager, Dan Martinez, doubts Tollett was bluffing.
“The thing about Goldenvoice is that when they make a promise to us, they always follow through,” said Martinez. “So I had no reason to think they weren’t going to follow through with that comment.”
Mayor says a ticket tax is ‘not where I wanted to go’
One of the biggest opponents to the ticket tax was Elaine Holmes, who’s now Indio’s mayor.
“Granted budget shortfalls are an issue for many cities," said Holmes. “We work through it. I’m a small business person, so to add tax is not where I wanted to go, particularly since Goldenvoice is very generous in what they provide the city.”
The company contributes to many local nonprofits, including sponsoring a free medical clinic for residents with no health insurance last week.
And they give more than charity.
A Goldenvoice-commissioned study showed that its festivals bring more than $90 million dollars in economic impact to Indio and $254.4 million to the Coachella Valley.
Starting last year, Indio started receiving a hotel occupancy tax for everyone who camps at the festival. That brought in about $330,000. The city also started getting a cut of every ticket sold –though a much smaller one than Torres would have liked.
This year and last, Indio received $2.33 on every ticket, which works out to about half a million dollars a year – no small chunk of change for a city with a $49 million dollar annual budget. The fee is set to double starting next year, under a new 17-year agreement the city approved last week that also adds two fall festivals and expands the festival’s capacity.
“Increases like that really help us balance our budget,” said Martinez.
Torres was among the council members who unanimously voted for the new agreement with Goldenvoice. (Holmes abstained because she owns land near the polo grounds)
“I’m grateful that they came to the table and gave up something for the city of Indio,” said Torres.
Indio’s first new hotel in 28 years
Standing on a nearly deserted street outside city hall, Holmes says the long-term economic boost that the city’s new agreement with Goldenvoice provides – not an expensive ticket tax – is what will help bring Indio back.
“This is a several-block area that is expanding now with local arts and culture and hopefully a few restaurants," said Holmes. “Certainly [Coachella] is putting Indio on the map. It’s pretty quiet, but it’s less quiet than it was a few years ago.”
The Holiday Inn Express recently announced plans to build a new location in Indio. It’s the first hotel to be built in the city in almost three decades.