Committee Minutes
ALERUS CENTER TASK FORCE
Thursday, February 4, 2010 - - 5:00 p.m. - - Council Chambers
Minutes
Present: Gershman, Christensen, Bjerke, Block, Emmons, Glassheim, Hafner, Hutchison, Kreun, McNamara, Rygg, Thompson.
Absent: Bakken.
Gershman called the meeting to order at 5:00 p.m.
1. Discussion of Draft Task Force Report.
The group reviewed the draft report as compiled by Christensen and comments provided by other members of the Task Force. The format of the report was considered with suggestions from several members. Glassheim stated that he feels the report should include findings and state support for the numbers contained in the Blackwell report as discussed at prior meetings. Following a vote, consensus was to not include exact numbers, but just that the facility is a great asset in the community and has a positive economic impact in the community.
The commission should have seven members, 6 selected at large and 1 City Council Member whom should not serve as chair, that there should be a limit of two three year terms which would be staggered, that UND should have an ex-officio nonvoting member on the commission.
Group discussed whether there was a conflict having an individual from the company that pays for naming rights serve on the board and whether naming rights gives an automatic seat. Consensus was that those individuals do have a vested interest to make the facility run well but should not entitle them to a seat, however it also was not a conflict and could bring value to the Commission.
The commission should establish their own committees.
The commission should coordinate financial activities with the City Finance Department and should explore if there are better ways for operating or having all expenses run through the City Finance Department. Christensen stated that he knows there are different accounting softwares used by the entities now and some concern over privacy on some items, but the Fargodome Authority uses the City of Fargo for all accounting functions and think that it is worth reviewing to see if it could work.
All meetings of the Commission and any of its committees should be noticed and conducted as public meetings with proper minutes and recording as City meetings are.
Monthly financials should include details of operations, as well as an executive summary that explains the results and highlights any extraordinary occurrences, such as weather problems, etc. that may have affected performance at an event. Task force members that have samples of reports used in their organizations will email those to be forwarded to the Alerus Center for examples of ways to present the summary information that could be more helpful to Commissioners and others reviewing the reports. The intent is to not just get more information, but to improve the quality of the information so that it is meaningful to those that need to evaluate it.
The Commission should operate within the approved budget for the facility. Christensen explained that per State law, governmental entities can not go beyond the approved budget. The group discussed how unexpected additional events could be handled and at what level should amendments to change the budget be brought to Council. Hyman responded that his understanding is that the Council wants to know when things will be out of line from what was planned. The draft was modified to clarify the intent is more on the net budget affect with exception being larger events with large potential for risk which is addressed separately in the document.
A full set of accounting records should be kept at the City Finance Department. This would allow for earlier analysis of the records than looking back at the end of the year or quarter and then trying to address things that would need to be changed. This includes a detail of expenses.
The Commission should review the mission statement for the facility. Bjerke pointed out that should also include the Bemidji facility that is currently being constructed and will be managed by Venuworks, as there is great potential for conflict with having the same company managing another facility within our region and could see some preference for scheduling being given to the other venue over ours if it is monetarily better for Venuworks to do that and we should be aware of it. McNamara cited the example of a similar problem with a performing arts facility that Venuworks manages in the Twin Cities and then they purchased Chanhassen dinner theatre nearby and that there are many issues on the internet related to profitability and conflict of interest between the two.
The draft should be changed to reflect that the commission should “strengthen” its relationships with Canad, and CVB. Rygg stated that she wanted to clarify that the Alerus Center staff does work well with the CVB now and wants that noted. She continued that any comments that she has made are on processes and ways to make events flow better for potential clients. The group discussed that while the “one point of contact” would still be preferrable, realize it may not be possible given the nature of the two entities and their structure, but that the Commission should explore ways to make the convention experience as seamless as possible, to streamline events at the Alerus Center. Rygg noted that Canad does have the ability to host small meeting events in their facility and that could be a conflict for some events and need to keep that in mind.
The Commission should review its relationship with Venueworks.
The group noted that the Commission has already brought in Dr. Flynn to update the economic impact study that is used. The Commission should make quarterly reports to the Council summarizing operations for the quarter and should remove the economic impact numbers from their financial statements. In addition, the Commission should make sure that staff are properly trained and have the skills to deliver information to the public and media.
For large concerts, there is consensus that notice needs to come to Council before a commitment is made that could result in funds being needed from the City. The group discussed how to word the recommendation that would convey the intent, potentially define a “large” event, so that the Commission would have a guideline to work with. Bjerke asked whether there has been any update in the matter of Venuworks sharing in the risk for large events. Christensen stated that the contract has not been amended to relieve them of the risk, as it has never been brought to Council for approval so they are still sharing the risk.
Kreun inquired on the contracts section, as states that they can not be for more than one year, but have many multi-year contracts for maintenance items, suites, etc. and need to still have that ability in order to operate. The group discussed the intent and will work with Howard Swanson on proper legal language to include in the document.
The group discussed whether the ¼ % should be included in the budget or not. Hafner commented that the facility needs to have something to help them manage their losses. Christensen stated that there are items that they can look at as now pay $180,000 to Venuworks plus the directors salary plus all the other managers and need to come to them and ask them to look at how could do things better, as only way to balance budget is find a way to increase the gross revenue, decrease the expense or combination of both. Gershman added that the Fargodome sales tax has now ended and they are able to find a way to not only balance their operations, but are returning a profit and need to take a look at things and see what can be changed.
Hyman commented that a large part of the budget is full time salaries and $380,000 loss of income is a large impact on the people resources available to run the events at the Center. He added consensus was that the facility has a net positive impact and if accept that then is it enough to justify a loss at the facility. Hafner asked whether the facility could operate within the ¼%. Hyman stated that they could not, at least not at the level of service that they now have. He added that the Commission has already taxed them to go back and revisit the 2010 budget to look for efficiencies. He continued that also need to bear in mind that a major tenant is UND football and not really an arena, but an indoor football stadium hosting 5 games a year and with arena / stadium will always cost more than it brings in at this point and need to look more at the net effect.
Christensen stated that then the upside is need to look for another source for a reserve for the facility which leaves us back where we started. Gershman commented that he thinks we need to review the expenses and that there is a tipping point where cutting becomes detrimental to your service, but believes that it is valid to look at. The group continued discussion on history of facility, effect that the Ralph has had, and the Fargodome operations.
Consensus was to include in the report a recommendation to review revenue and expenses; to strongly encourage the budget to stay within the ¼ %, and to also strive to create a reserve from those same funds/build a surplus.
The group asked for other suggestions that task force members felt should be included in the report that have not been addressed.
Rygg suggested the Alerus Center Commission hosting an annual meeting with City Council and other stakeholders and explained how they do that at the CVB.
Bjerke brought up including something on using the ¾ % for off-site infrastructure projects that benefit the Alerus Center. Kreun commented that the Alerus Center does pay special assessments for those properties and if that isn’t double-dipping. Christensen commented that some could view it that way, but would be benefit to the taxpayers in reducing their expense for those projects. Following discussion, consensus was to consider this on a case by case basis as projects arose and not include in draft.
The group discussed a potential change in the Home Rule Charter that would amend it to match the bond covenants. Consensus was that the Alerus Center needed to get beyond the recommendations of the task force and continue to work on operations before directly addressing this. Christensen proposed including a recommendation that the Commission and City Council work together to plan for a change in the Home Rule Charter and would also involve City Attorney in this matter. Thompson also stated that could also look at ability to let additional bonds to fund further development at the facility.
Glassheim suggested 1) recommending that suiteholders be surveyed / focus groups held on what their suggestions would be for events, etc., but understand that is already being done so may not need to include it; 2) meet annually with the Council to plan and discuss strategy, or perhaps quarterly, and possibly as a separate work session; and 3) encourage the center to continue to host a mix of large and small concerts and events and that the mix should not be limited solely by profit.
Christensen stated that he will bring an updated draft report to next week’s meeting for review and finalization.
Bjerke stated that he still has concern for how the recent transfers are to be treated (Hal responded that they are being carried as a loan), that we are not getting return for the fee that we are paying the management company, noted that the Home Rule charter reflects the correct language for usage of the bond proceeds as that is what was on the ballot, the Bond Covenants were written incorrectly, he does not believe that a change should be made, and that the task force report should stick to more facts and not try to be a public relations piece for the facility.
Christensen responded that while he can agree with some points, but while there may have been some poor decisions made, the facility is still a great community asset and need to recognize that and look to move forward.
Rygg commented that at the outset of the task force the intent was to have a consensus opinion come out of the group and would be to support the building in a positive way and hope that personal differences can be set aside so that can happen.
Meeting adjourned at 7:45 p.m.
Respectfully submitted,
Sherie Lundmark
Admin Spec Sr.