In the meantime, $90K fund transfer OK'ed to get by until $200K in payments come in.
Realizing that they have no choice but to replenish Crookston Sports Center's budget, the city council's Ways & Means Committee Monday approved a $90,000 influx of cash that Finance Director Angel Hoeffner said will be sufficient until around $200,000 in lease payments from the school district, UMC and Blue Line Club come in this summer and fall.
The committee endorsed a plan put together by Hoeffner and City Administrator Tony Chladek that has $65,000 of the $90,000 coming from the city's Municipal Land and Buildings Fund, and $25,000 coming from money left over after a phone systems upgrade.
But, wanting to do more than approve a stop-gap measure to ease CSC budget issues over the short term, the committee, acting on an idea pitched by Mayor Dave Genereux, approved the formation of a CSC budget "task group" that will go through the sports center's budget in detail, find any red flags, and make recommendations to save money. Council members Dale Stainbrook, Tom Vedbraaten and Bob Quanrud will serve on the task group, along with Park Board members Larry Brekken and Mike Tiedemann. A third Park Board member will be tapped to serve on the group as well.
Not deceived, but uninformed
The $90,000 shortfall came to light last week, when Hoeffner said the payment of an electricity bill that coincided with a quarterly interest payment of $40,000 tied to the New Market Tax Credits that helped build the CSC required her to dip into a required $60,000 reserve fund, also tied to the tax credits. At that meeting, high electricity bills were pointed to as the main culprit behind the budget strain, but Hoeffner clarified that a bit Monday, saying that overall utility bills aren't dramatically out of line with where they've been previously, since the facility opened in January of 2010. Some expenses are up, she said, adding that CSC revenue in 2012 was down around $70,000 compared to 2011.
Although the immediate budget concerns only came to the council and park board's attention in recent days, apparently some fund transfers have been made over the past couple years as part of the annual CSC budgeting process. Monday, council members said that needs to stop. Ward 3 Council Member Keith Mykleseth said he wants to see a detailed, line by line expense and revenue budget, so he can see specifically what's coming in, what's going out and what it actually costs to operate the facility. Hoeffner said she'd get that information to council members today.
"I don't think I want to say I feel deceived, because that's too strong of a word," Mykleseth said. "I don't know what word I'm looking for. I feel..."
"Uninformed," Genereux interjected.
The old Sports Arena and Crookston Civic Arena always ran an annual operating deficit that approached $300,000 before the city held back on various investments because it was widely assumed the facilities would have to be demolished to make way for a new levee. The CSC has actually been running deficits that were less than the highest ones carried by the former hockey and skating facilities – and less than originally projected, too – but the old facilities never had a shortage of cash that needed to be immediately filled.
Raising the fee paid by outside entities like the Blue Line Club for off-season ice, outside of the city-funded hockey and skating season from Oct. 1 to March 31, is always an option, but many around the table realized Monday that continually raising fees can't be the first option all the time.
"We need to look at the entire operation," Genereux said in making his case for the formation of the task group. "Maybe we close it up entirely in July and August. Just shut it down and save on bills."
While the task group won't go through the overall Parks & Recreation budget line by line, Parks & Recreation Director/CSC Manager Scott Riopelle and his staff will look at ways to save money in the Parks & Rec budget. With talk of adding programs at the CSC like curling and archery, At Large Council Member Wayne Melbye said it might be time to revisit recreational programs that have low numbers or are losing money and consider nixing them. "If things are running a deficit, we need to look at them," he said. “We’re talking about adding programs, and that just costs more.”
Everyone agrees it's a complex situation to get a firm handle on. In order to get the $2 million in New Market Tax Credit revenue that helped build the CSC, a “limited liability corporation” had to be formed, known as Crookston Civic Arena LLC, and it needs to remain in place for approximately four more years. As a result, the CSC is officially under the Crookston Housing & Economic Development Authority umbrella. As a result, Riopelle said he hasn't done a lot of detailed work involving the CSC budget. "We did all of the other Parks and Rec budgets, but when we got to the arena portion we didn't touch it," he said, adding that he and his staff will commence with digging into it. "If we can look at it, we'll figure it out."
"What's confusing about it is we have a number of budgets going simultaneously, with funds going back and forth," Ward 1 Council Member Tom Jorgens said. "We don't have a straight-up accounting of the arena, and that's what we need. If we're here again next year having this conversation, it's going to be a very serious deal."
Hoeffner said if it turns out that she doesn't need all of the $90,000 to see the CSC budget through the fall, she will return whatever is left to the Municipal Land and Buildings Fund.