Committee Minutes

ALERUS CENTER TASK FORCE
Thursday, January 28, 2010 - - 5:00 p.m. - - Council Chambers
Minutes

Present: Gershman, Christensen, Block, Emmons, Glassheim, Hafner, Hutchison, Kreun (also on Alerus Commission), Rygg, Thompson.
Absent: Bakken, Bjerke, McNamara.
Alerus Commission Present: Randy Newman, Brian Faison, Darrell Larson.
Alerus Commission Absent: Dave Evenson

Gershman called the meeting to order at 5:00 p.m.

1. Discussion with Alerus Center Commission.

Randy Newman, Commission Chair, read a statement to the Task Force. His statement included a desire to move forward working collaboratively to with the City to make improvements that will enhance the operation of the facility, will address any perception of lack of transparency, continue to provide reports to the Council monthly and annually including being a part of the annual audit, reiterated that there has never been an intent to hide or distort any financial information, that the one open meeting violation was not intentional. Newman concluded that the Commission has requested two new appointees to fill the vacancies on the commission, encouraged Council to review it’s ordinance and support a change in the Home Rule Charter that would bring the ¾ % tax inline with the Bond Covenants, that they are reviewing their 2010 budget to look for efficiencies, will be reviewing the performance and relationship with their management company, and are enthusiastic to move forward in a positive manner.

The floor was open for questions / comments.

Hutchison requested that a copy of the full statement be provided to task force members for their reference and asked whether the Commission has any thoughts on an event mix for the Alerus Center. Newman responded that they have been thinking about this and believe that they have come up with some very successful community minded events (i.e. the Easter Egg Hunt, Holiday Lights Festival, Garage Sale), but are not profit generator and believe that it is important to continue to include this type of event as they serve the public purpose role of the facility. He continued that he believes it may be a good time to reexamine the mission statement and make sure it is still appropriate given recent changes in the community, increased impact of the convention center, and concert industry, that they would like to present a balanced budget, appreciates the points that have come out about the communication and understanding on the economic impact issue and is not sure about restructuring the mix of events purely to achieve a particular number, as it may not be the best result for the community.
Larson added that there is a desire to continue to provide large concert opportunities for the community, but given changes in the industry that may not be possible without incurring substantial risk and potential loss, but on the other hand, the lack of larger events also poses a problem with retention of suite and advertising revenues and not sure how to balance that.

Emmons inquired how the decision to bring in an event is made. Hyman explained some are because we have been able to get on their circuit ( rodeo, monster truck, etc.) and some are at the mercy of promoters. He explained how promoters plan their tours and then infill from the secondary markets which we are a part of. He stated that they do also work with the radio stations and look at demographic and listening patterns to help determine what would work in this market. Newman added that sometimes we may want to get a certain artist because they are popular locally, but they may not be touring or may be only working in other areas of the country and that if we still want them to come then we would have to take on even more risk and expense for getting them here. He commented that the upcoming year will be a challenge as all the suite contracts are up for renewal and advertising revenues were down in the last year so need to address what needs to happen to keep them where they need to be. Hyman gave an example of the Black Eyed Peas and some information related to that concert.

Hafner stated that they had received some information from the Canad Inn and wanted some input on how that relationship could be improved. Hyman stated that when he first came there was no relationship but have been working on building that and has been some hiccups lately since the departure of Jeff Jasperson as General Manager in September, and Canad has had 4 different General Managers since then and met with Rossini today and started discussions on how to bring that relationship back to a better point. He added that they will have a weekly sales meeting and share calendars. Newman commented that he also met the new manager today and that it takes time for staff to build those relationships, but the Commission believes this can be a win/win situation and would like to set the tone for a good relationship and looking at setting some rules for the sales staff to use to help them work together better.

Emmons inquired whether there are any thoughts on going to the one point of contact. Hyman stated that they did have some discussions about that with Jasperson when Canad first opened, but there are some challenges in that there are two different computer systems that don’t integrate, but do have in place a point of contact that each facility can call at the other for immediate information on calendars and scheduling and are looking at potential ways to make that better.

Christensen stated that he hopes that there is a strong look taken at the business plan including reviewing market changes due to new facilities in the community; has a concern that they keep talking about having to have large events to keep suite revenue, but that is a small revenue in the scope of the budget and believes that we need to rethink that. He continued that he reviewed the Fargodome Authority ordinance and it states that they can’t spend in excess of their budget or outside their budget year and believes that the Commission should also follow that and asked how the Commission would feel about coming to the Council for expenditures that have potential to be outside those parameters. Newman and Hyman both stated that they would not have a problem coming to the Council and would be open to having other partners to share the risk. Kreun commented that he believes there should be a threshold and maybe if it is a recurring event that was successful in past not necessary.

Kreun referred to the mission statement which is the one in place since opening and that based on that should be looking at a large event each year, but could still come to Council with that. He also noted that there are other revenue sources that are also coming up for renewal and uncertain at this time including naming rights and provided some additional revenue information on the suites and commented that it may not be as low impact as earlier stated. Newman commented that we will be looking at everything as go through the evaluation process.

Emmons commented about the percent of payroll and that it seems high. Hyman stated that is the main expense for most facilities of this type and that could provide some comparative information for the Task Force. Newman stated that the hard part of their business is that they can’t just take their expenses and predict the revenue, the outcome is all dependent on the events and need to compensate staff at a comparable level for their skill and will share the information for other facilities.

Hutchison commented on the suggestion to make a change in the Home Rule Charter to allow for broader use of the ¾ % tax and stated that the concern from some is that could lead to more deficits and be viewed inappropriately as giving them an open checkbook for loss coverage and not the intent if that is done.

Thompson asked if there are any governance issues that the Commission would like clarified. Newman stated that they have had vacancies for a period of time and have already asked to have those filled, would also like to see some term limits put in, but hard to do that when the vacancies continue, and suggested that rather than industry specific should perhaps have most members be at large, but be experienced enough to be able to effectively function on the commission.

Block inquired about the structure of the commission. Kreun stated that there used to be a Finance Committee, but with the vacancies hard to fill that so has not been meeting and instead, officers acted as executive committee, as with large events need to have a group that can react on the decision so manager would bring to the officers and they would discuss and then chair would sign off on it. He added that he would recommend that the Council representative on the commission not hold the position of chair. Rygg added that when new appointments to the Commission are made, one will be a representative on the CVB board and is an important position, which last appointee filled very well.

Rygg asked about the role of the management company versus the Commission for operations oversight. Newman stated that is something that they are taking a look at. Larson commented that they have been operating as a board and trying to not get into the running of the facility, but are reviewing it.

Gershman commented that the Alerus Center, CVB, and Canad are not working as well together as they could be and need to eliminate the drama and fix those relationships. Newman stated that he would also add UND to that group and maybe not have all four represented on the Commission, but maybe ex-officio roles for each. Gershman agreed that probably not on the Commission, but should certainly be consulted in the decision on what events may or may not be draws for the community and would hope that collaboration happens better and more frequently. Rygg commented that we don’t do the best job selling ourselves that we could and cost is one problem with the facility and are losing some conventions because of this. The group discussed some feedback related to the cost and types of items that have been brought to the attention of management and staff in the past from event planners. Newman stated that the fund that was initially established was to be an event fund, not a concert fund, but has been used up by concerts, and if change that would be a source to address some of those issues and get those events.

Christensen stated that is part of reason for looking at getting a budget with and without the ¼ % tax, as if those funds were freed up they could also be used to cover event risk and convention bidding. He added that the CVB is also getting additional revenue now and have been using some of that for this purpose and together have a large pool of dollars to work with as an event fund. He challenged them to challenge their staff to look at ways to cut expenses or change processes to make the building work better and thereby free up dollars to use for facility needs.
Glassheim comented that a change in the Home Rule Charter will also free up some dollars for events as well as paying back the City and still allow for debt service, but will require a vote of the public to get it done. Newman replied that he appreciates the support and believes that they are in default due to the conflict in the ordinance.

Christensen stated that there is no default, and if there is going to be a call for an election, then there needs to be a plan for how those funds will be used if it passes and Pro side is using it to pay back the City for the Economic Development Funds used, but the Con side is there are some that will view it as a blank check and that is not the intent. If this change is going to go forward, would hope that we move now to get on the June ballot. He is in favor of building a model that will show cohesiveness and success for the facility. Newman agreed that the change should not be viewed by any as a blank check and last year’s performance was bad and unacceptable and would like to build to an acceptable range of operations and then look to establishing an endowment fund which can fund needs of the facility after the sales tax is done. Christensen replied that the amount generated by the ¼ % should be viewed as the range and should not look at going outside what those funds will cover. He asked about the margin on catering. Newman stated that they are at 40-50%. Newman continued that they have always tried to project a balanced budget and tried to stay within $150,000 of that and need to have a determination of whether that’s acceptable.

Christensen asked how the Commission would feel about the Executive Director becoming a City Department Head and perhaps that could be included in the Ordinance. Newman responded that if there is a need for the director to be at City meetings then he will be there and agreed that is a good way to become aware of issues and concerns and can then react to them before they grow. Newman pointed out that he would also like to say that for media coverage is always skewed in our community and when a loss big headline on front page, but when profit small story in back of a section and like to see that change as well, as have a $79 million asset that should be proud of and promote. Rygg asked whether the intent was that all employees would be city employees. Gershman clarified that only thinking of the director, but that is perhaps a discussion for a later meeting.

The group agreed that the discussion was very helpful and thanked the Commission for their input. Commission Members left meeting at 6:40 p.m.

Gershman noted for the record that Mr. Bjerke was not able to attend tonight’s meeting due to a work conflict.

Christensen reviewed with the group some consensus items that he had and stated that he would work on a draft report and forward to the group for review before the next meeting.

Commission Structure – 7 members, at large, with term limits that are staggered. That the City Council have a representative, but they should not hold the office of chair. That UND should have an ad hoc member. The City Finance Director should have a role. They should attend the meetings and perhaps be included as a member of the Finance Committee of the Alerus Center.

Thompson asked why the Alerus Center should have a separate finance department and whether it could be a cost saving and seemed like a duplication of efforts and rather treat like a home office scenario. This could also lead to a better application of consistency in policy and then charge the Alerus Center on a fee schedule for the activities related to their operation. The group discussed various pro’s and con’s of that change and potential conflicts with agreements that are considered proprietary and if City could be involved with that. The group discussed that this is an area that could perhaps be further explored in the future to see whether or not it’s possible.

Budget should be presented with and without inclusion of revenue from the ¼ sales tax – group consensus was to hold on this item until next meeting when other members are in attendance to provide their thoughts and rationale.

That Alerus Center review their business plan – They are already doing this, but include as recommendation. Gershman commented that they need to be careful in evaluating the Mission Statement and not let profit solely dictate events, but allow for events that benefit the community, but not make money.

That Alerus Commission review the management of the center – They are already doing this. Should a nonprofit structure be set up that would have ability to hold liquor license or can be catered.

Council Oversight of the Commission – greater detail in reporting for better analysis. The group discussed that something similar to the Fargodome reports that includes analysis of why event performed as it did.

Reporting to Council – Quarterly report from the Commission to the Council, as well as the annual recap. Not just a numbers report, but tell the story of what the facility has done, promote our story.

Policy and Procedures – The Alerus Center should follow all City policies, including purchasing, travel.

Alerus Center should stay within budget – Only activities that will fall within the approved budget should be approved. If opportunities for events come up that would fall outside the budget, then they should be brought to Council for concurrence. When coming to Council they should include recap of why the event would benefit the community and input from stakeholders as to their thoughts on the event and its potential success. This could include not approving a guarantee on an event without consultation from Commission and Council. Kreun stated that there should also be some parameters set for this so that staff is able to work more smoothly with events.

Economic Impact – Quarterly reports of economic impact should be shown net impact, not gross. They should work with Dr. Flynn to update the model so that they can input the data and generate the reports.

Contracts should be reviewed by City Attorney – Contracts should be reviewed by the City Attorney, perhaps a level or template document for some recurring lower level contracts could be set.

Spokesperson – Those speaking for the Alerus Center should be knowledgeable and appropriately trained to deal with the media and best represent the success or the facility and be able to handle questions as they arise. Examples of past public relations concerns were discussed. It was noted that this is very important, especially in the management positions. The group discussed that this includes reporting information in a way that is easy to understand for the public, such as attendance number, number of events, and promotes credibility and professionalism of the facility.

Integration with the CVB, Canad, UND – Steps should be taken to improve the working relationship with the CVB, Canad, and UND including collaboration and evaluation of events, as well as functioning more cohesively when events are occurring. For convention activities that occur at the Alerus Center/Canad in, a system should be developed to allow the event planner to have one point of contact that can handle items at either facility.

Minutes – All meetings should be recorded and should have detailed minutes.

Consensus of the group was that perhaps two task force meetings would be sufficient to finish up a report. There was not a need for further presentation from Canad at this time. The report will be prepared to emphasize the positive nature of the task force and its intent. Once the Commission has received the report, they should review it and then would like them to respond to suggestions.

Meeting adjourned at 7:40 p.m.

Respectfully submitted,
Sherie Lundmark
Admin Spec Sr.