Committee Minutes
ALERUS CENTER TASK FORCE
Thursday, December 10, 2009 - - 5:00 p.m. - - A101
Minutes
Present: Council Members Bakken, Bjerke, Christensen, Gershman, Glasshiem, Kreun, McNamara (joined meeting in progress); Dwight Thompson, Duane Hafner, Julie Rygg, Mike Emmons, Laura Block, Bill Hutchison (joined meeting in progress).
Gershman called the meeting to order, welcomed all, thanked the citizen members for agreeing to serve and shared thoughts on the purpose of the task force and his view of the timeline for the commission to complete its work. The group set a meeting time of Thursday at 5:00 p.m. with meeting dates of December 17, January 7, 14, and 21, with January 14 being a public input meeting and will revisit future meetings at that time. Minutes will be kept of the meetings, distributed to members and posted on the website and ability for participating over the phone would be available.
The group discussed the reason for the task force and why we were here. Christensen commented that perhaps one of first areas would be to look at the history and review the governance of the facility and whether it fits the needs of the facility today or whether there are changes that need to be made to alleviate some of the concerns, as well as reviewing the reports that are provided from the Alerus Center and have made a shift in some of the focus of the facility and may need to review whether there are things that we need to examine and modify if appropriate. Gershman commented that there has been a lot of talking between individuals and can’t effectively run your business with that going on, need to look at the facility and work with the Alerus Commission to make the facility successful and build consensus on direction for the future. Bakken commented that economics in this industry have changed in recent years and not a question of management, but part of the current industry economy and have heard very positive comments from users of the facility and agrees that need to look at this and put it to rest.
Hafner asked for some information on task force policy and procedures and how they will work, voting rules, etc. Gershman replied that this is a Council Committee, like to see all issues or suggestions that people be heard here and vote on it and then be done with that item and adhere to the vote and our votes will be recommendation back to the Council and to the Alerus Commission. Christensen added that would like to see us come to a consensus on the items and not end with 6-5 vote as that still seems like division on the issue and not a good idea and also don’t expect to get unanimous on all issues, but want opinions on how to proceed.
Thompson was appreciative of items distributed in the binder and asked what direction members should take for further information. Gershman stated that members should contact Steve Hyman, Executive Director of the Alerus Center, and he would provide those items. The group discussed that information requested should be forwarded to all members. Glassheim suggested that perhaps should consolidate the information gathering and perhaps make some of those requests today for things that we would like to help us make good decisions.
Block commented that in reviewing the by-laws notes that a budget gets approved, but no reference to review and how they evaluate and monitor or what type of follow-up and this may be part of the problem with governance. Thompson agrees that would be good to take a look at that reporting.
Kreun departed the meeting at 5:17 p.m.
McNamara joined meeting at 5:22 p.m.
Hutchison joined meeting at 5:25 p.m.
Hamerlik, former City Council Member and Alerus Center Commission Member, commented that was involved for 11 years and in the early voting and planning stages of the facility. He went to Mayor’s Office, City Clerk, Engineering and the Alerus Center all have information that is readily available to individuals that would like to review it and there are staggered terms for commission members, but not term limits; resolution passed by Council states that Council shall review the budget, but not have control of management; that if there are financial needs, that money that previously would have gone to the Civic Auditorium, ¼% sales task and any other money that is needed shall be available to the facility; that there is a statement in regards to conflict of interest and if anyone should miss more than three meetings that the Chair of the commission should take action; along with many other items. He continued that these are some of the items that have been brought up and would caution that perhaps the group should go slowly and know what’s already there and while can change or tweak at the discretion of the Council, look at what was promised to the citizens in the past and things have changed and while wise to review when changes happen, go slow and don’t offend the public. He hears that the facility is a success and keep this success and the past promises that were made when considering changes.
Gershman distributed a list of some topics that he would like to see discussed. Christensen referred to the Ordinance creating the commission in the binder and that no question that we are dealing with great community asset and funding as a public entity will not change, but seems that have a governance issue and should exercise oversight and other concern is what would our expectation be for the Commission to have of their manager and perhaps that needs to come from the Commission to us, as seems that wasn’t addressed at the time we passed the earlier ordinance. Christensen encouraged any members to bring other requests for information forward so we can get it to you as soon as possible. Gershman agreed and if those items could come to Christensen or him and then we can prioritize them and get an email list distributed so that easy way to get information out to all in timely basis and hope that issues come forward in the next couple of days and will review and prioritize them.
Suggested items for inclusion in discussion were:
1) Presentation of basics of the Alerus Center center including the financing and bond covenants for the Alerus Center so that all on the task force have the same knowledge.
2) Also like to see the status of repayment of debt, what we’re collecting in taxes, terms of bond and are we fulfilling the terms of that bond.
3) There is confusion as to who is the true director of the center and how that authority is separated. Gershman responded that the intent was for day to day operation to be Commission. 4) Vacancy that has been ongoing and not filled and has reduced the number on the commission and also need to look at what expectation of these people should be for work between commission meetings and if perhaps subcommittees would be appropriate and maybe should have a review of the interface between the management and commission.
5) Maybe include what we as a Council should be doing for oversight, if we are supposed to. Council reviews budgets and pay shortfalls and what level of risk should the Commission be authorized to take without bringing that item to the Council and what steps should you take to analyze your risk before you commit.
6) There is a public perception that they should have more oversight over the commission and may not be the way it was initially set up, but given some of the items that have come up, including the transfers that aren’t discussed until months after they occur and is a wonderful facility, but need to look at the openness of information and is a big expectation of the public.
7) Discussion as to whether the mission of the Alerus is to make a profit and be in the black or make an economic impact on the community. City leadership all needs to be on same page with that, which will lead to greater success for the facility in the future.
8) Level of risk and amount of loss triggers many of the discussions that we have and seems to be a lack of trust and uncertainty of the numbers given for the economic impact and financial sitting of the facility. Would like to see David Flynn come in and review how he comes up with the numbers that are sited including numbers from sales and property tax and economic impact and would hope that after that we can come to a consensus on what Council is comfortable buying into from those numbers and then know where we’re at with that.
9) Discuss how we manage our manager and key factor should be more than one indicator whether economic impact or some other and should have some goals and benchmarks that should be monitored to judge if those are being met and should Council be involved with setting those and evaluating the outcomes. Seems that most of Council may not have the risk appetite that private business may have, and does the City need to look rather at all those goals and not at the risk to judge the management.
10) Must preserve the suite and advertising revenue and find out what those clients expect and that does impact the risk you’re willing to take.
11) Can’t always look at if something makes money, but perhaps what is good for the community, like the Pops concert this past weekend and have some things that are lower cost and may not make money but serve the public and enhance the community.
12) In discussing preserving the revenue streams, when come to Council with request to make improvements or continue certain service to maintain a revenue stream would also like to see information on what you might be losing if you don’t go ahead with that and what alternatives could be to replace it if it’s lost and not always need to keep everything that we had, but sometimes good to take a full look at what possibilities are and have all the information to evaluate in making decisions and may sometimes lead us to discover other new revenue sources.
13) Need to look at the business model and does the price set for the suite and advertising lead to the need to look at riskier events to substantiate it and perhaps need to look at that model and say if cut those costs and bring down the need for major events could be better model out there. Feel we should look at it and validate the model one way or another.
14) What is the advertiser satisfaction and the suiteholder satisfaction level and then evaluate that in the mix with everything else. Suiteholder responded that holds his as a benefit to the City, but there are others that were promised and getting things when first opened, and not same as what we are actually getting now and not being used for clients and could be questioning their return on investment and if so may lose some.
15) Does anyone look at the events and what went wrong and what should we be doing differently next time? Need to do that and have an evaluation process in place so don’t keep making same mistakes. Be good to get a review of what is our realistic market for different types of events is and look at that for different types of events and also to look at what people in our market are looking for us to provide, as with wrong product we won’t ever succeed.
16) What is the depth of our discussion? Are we going to look at the broad picture or details like the market study? Gershman commented that he feels that should come up with some requests and recommendations and maybe we don’t put together the market study, but can come up with recommendation that should do one.
17) Current economy is troublesome and not profitable for concerts right now. We need to consider this difference in economy now from where it was 12 years ago and where it might be a few years from now. People are making choices about where to spend their dollars and may not be a concert now. Note that people are good in the community at complaining there is nothing to do, but when there is something to do they don’t support it. Group discussed that with recent concert we did as well, and better than, several other venues in larger cities did.
The group discussed that if add up all the money loaned by the City to the Alerus Center over the history of the facility, have maybe total of $1.1 million, which is just over $100,000 per year and not much different than with old Civic for what we are getting. McNamara commented that would like to see this process set the Alerus Center up with a metric that will lead to their success, that management, the Commission and the Council are on the same page with and that the public can understand the rationale for the metric. He continued that there are suiteholders that are not happy with what they are getting for their investment and need to look at how to preserve that revenue without setting the facility up for failure. He added that we want the facility to succeed and all to feel a comfort level with the structure and where we are going forward.
18) Major Concerts may bring some other intangibles for the city and region that can be important. This is where risk reward needs to be looked at and are we at a level that is comfortable and most businesses have a loss leader and if get the level to an acceptable point we are comfortable with to uphold that reputation. This does more for us than just pacifying the suiteholders.
19) Some hear other comments that there are people not satisfied with taking risk just to satisfy suiteholders. Even if don’t make a profit need to look at making the losses as low as possible. Old Civic was not managed well and that was why it lost money and need to get past that comparative argument and need to evaluate the facility on its own. Can change anything that needs to be changed to make it run better.
20) In looking at the numbers, justify why we include economic impact from events that were already here and happening before the Alerus Center came about and why we should not only include new events and activities or increases in attendance from old events in looking at Alerus Center economic impact. Feel this may improve credibility if you use good data.
21) In regards to the subsidy, citizens have been told a worst case scenario for a subsidy, and have met that every year. If that were a business and always strive to be at that level, then we need to look at that and why we don’t strive for a higher level and any improvement from one year to another and need to communicate that is not acceptable to the Commission.
22) There are two things that have come about since we built the Alerus and not saying would have recommended a difference vote, but need to discuss – the Ralph and the changes in the concert industry and the large subsidies that they now require and like to learn some about that. Christensen provided some information on what comparable facilities do and which ones do not guarantee concerts including the Ralph and have also talked with some promoters and many no longer willing to take the risk or co-promote as they did in the past and has talked with those promoters. Question as to why Ralph gets the concerts without a guarantee and Alerus can’t. Partly because of size or concert that look at. Gershman added that also got the MTS Center in Winnipeg and that has been one of the busiest in the region and has effected us. Christesen stated that also highlights ways landscape has changed and why we need to look at this now so we can manage through the tough time and be ready to go when things change again.
23) Regarding the risk, can set a goal, but also need to make it so there is some stretch, as it shows they are working, but don’t want to punish them for trying, but need to look at what happens when keep making the same mistake over and over again.
24) Possibly have the Alerus Commission come to a joint meeting with us so can understand from their side why some of the decisions may have been made in the past. Is there a possibility to look at some similar size facility and see how they are governed and been or not been successful to the extent that they are willing to share information.
25) Also look at other peak indicators that may not always be financial and what those impacts could be from particular types of events that may be a certain type of customer base such as young adult, which all contributes to the success of our community.
26) Include the bond payment cost in the analysis of the Alerus Center.
27) Keep in mind that the Alerus Center is a multi-purpose facility and keep that in mind in our discussions.
Meeting adjourned at 6:40 p.m.
Respectfully submitted,
Sherie Lundmark
Admin Spec Sr.