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Sunday, June 17, 2012

Is imitation the sincerest form of flattery? Are Ramsey town officials intent on flattering their Vadnais Heights counterparts?

Ramsey, this online city calendar [highlighting added]:

Woo, woo. A community sports complex!

Vadnais Heights, here (with italics emphasis added).

Article by: TIM HARLOW , Star Tribune
Updated: May 8, 2012 - 8:34 PM

The Vadnais Sports Center, controversial from the start, has sunk into a financial morass that has city leaders faced with the choice of cutting ties with the arena and defaulting on $26 million in bonds or assessing taxpayers $1 million to keep it running.

Revenues have fallen short of projections. Expenses have exceeded budget. And the center that officials promised Vadnais Heights residents would be able pay its own way without their help has been delinquent in remitting a year's worth of sales taxes to the state.

[...] While there are no immediate plans to close the center, the glitzy facility that opened 19 months ago has created discord among city staff and council members.

Some City Council members and staff suspected that the arena at 1490 E. County Road E was under-performing financially, but the complexity of the bond financing and confusion over the ownership arrangement made it difficult to get a grasp on the depth of the problems. They recently got a clearer picture of the seriousness of the problems after seeing a council-ordered audit.

According to documents obtained by the Star Tribune, the sports center owes Vadnais Heights $127,000 for a loan the city gave it last year to make a bond payment. The center also owes the city $47,000 for unpaid legal and insurance costs, and there are $54,000 in unpaid utility bills. But most alarming for council members is that even though the arena turned an operating profit of $330,000 in 2011, that was far below the amount needed to cover debt service of $1.1 million.

[...] In championing the sports center, [former mayor Susan] Banovetz and others said the arena would have 1.3 million visitors and generate $2.3 million in revenue in its first full year, enough to pay the bills without tapping city money or needing a taxpayer bailout.

[... Q: She could not see how it could fail?]

Compounding matters is that the center owes money to the Minnesota Department of Revenue. [...] An accountant hired by the city said he feared the department would put a lien on City Hall.

Vadnais Heights already has contributed $3.2 million to the project, and, as master lease holder, is responsible for covering bond shortfalls. Bond payments are scheduled to rise to $1.6 million in 2013.

Who's in charge?

Signs of trouble surfaced about a year ago when an audit by the Edina firm of Abdo Eick & Meyers found that there was confusion about who was responsible for financial aspects, the city or the nonprofit Sports Facility Development and Management Group that the city hired to run the arena.

That confusion resulted in a $79,000 insurance check to pay for a dome collapse in 2010 being deposited into the management group's account instead of the sports center's account. It's still not clear if all the money has been transferred to the sports center's account, according to city memos.

Auditors also found that the arena suffered from sloppy recordkeeping and had been lax in checking user permits. The findings attracted the attention of State Auditor Rebecca Otto, who ordered changes.

The city complied. It took over the sports center's checkbook, and more recently it put out a request for proposals with the possibility of hiring a new management company. Sports Facility Development and Management Group's contract is up Dec. 31.

The center made its $582,000 bond payment in February, but it needed the loan from the City Council to make it. Another $582,000 payment is due in August.

The facility is "not self-supporting," the city said in an April 12 news release.

That's what some arena opponents tried to tell city leadership long before construction workers turned the first spade of dirt.

A separate management entity - for Ramsey just as in Vadnais Heights? Why not? Decisions will be made. Perhaps a Landform - Look Signs - Flaherty joint venture LLC could be formed to manage the Sports play place contemplated for Ramsey. All things are feasible. Possibilities are limitless.

Perhaps Ben Dover could own a piece of the management operation. The risk piece for Ben.

The reward piece, if any, would not be for Ben, but rather for the private sponsors of such a thing. Flaherty would approve of such a sports play palace arrangement. It would have the spoor of Flaherty ways and means all over it, so what's to not be liked by Flaherty? Or Cronk? We wait. We see.

Perhaps Ramsey could finally form that elusive "Port Authority" to manage the play palace (as if it were a port).

Again --- Possibilities abound. City officials will grab the brass ring, or put Ben under from the trying.

____________UPDATE___________
Earlier times, rose colored glasses, the mayor was excited; here.

__________FURTHER UPDATE_________
PiPress, here, by Sarah Horner, June 12, headlined, "Vadnais Sports Center pitched as a project that couldn't lose. It has."

The Vadnais Sports Center wasn't supposed to cost residents a dime.

The plan was this: The city of Vadnais Heights lends its bonding authority to a nonprofit that builds a 200,0000-square-foot sports complex on blighted acres in the northern suburb.

Revenue from arena rentals, along with a reserve fund, were to cover bond payments and operations for the $26 million facility, city council members were told, leaving the city with a cleaned-up corner of town and residents with two hockey rinks, a domed field and a running track.

"To me, it's a win-win," then-Mayor Sue Banovetz said in 2008, when the city first started talking about a sports center.

Fast-forward to today -- 17 months after the complex opened -- and city council members are wrestling with a different reality. Accusations of mismanagement, threats of lawsuits and growing financial problems are swirling around the arena.

"Is this where I (expected) us to be right now? No. ... Are we working diligently to correct the situation? Yes," said Marc Johannsen, the city's current mayor.

Preliminary numbers included in the sports center's 2011 audit indicate revenue was about $750,000 less than expected last year, according to city documents. To fill in the gap, the city has loaned the complex about $225,000 and is expected to hand over at least an additional $400,000 in August. The city's general fund is about $5 million a year.

Bond payments go up next year, meaning the need for loans could get even bigger.

We had a Ramsey Town Center launched during the Norman-Gamec times that "couldn't lose" either. Now we have a city financed rental bonanza [with a bank having the lien on the property, not the city], and it "can't lose" either, some say.

Sure. This year, the Boston Celtics couldn't lose with the lead they had in the Miami series.