Alerus adopts balanced budget for 2011
Under pressure from city leaders, Grand Forks' Alerus Center has adopted a new break-even budget for 2011. Revenues and expenses would match at $4.2 million each, but only because the city-owned events center now is projecting more concerts and m...
Under pressure from city leaders, Grand Forks' Alerus Center has adopted a new break-even budget for 2011.
Revenues and expenses would match at $4.2 million each, but only because the city-owned events center now is projecting more concerts and more advertising revenue, which could require a change in city law or at least a creative interpretation.
"It's an aggressive budget," Executive Director Roger Swanson said. "The previous years' average was six shows a year. Is it aggressive to estimate seven? Yes it is. Does it mean we will be aggressive? Yes, we'll try to do everything that we can."
Alerus Center commissioners previously had agreed to a budget with a loss of $134,000, which includes the built-in subsidy of the ¼-percent hospitality tax. That budget was produced by commissioners and staff from VenuWorks, the firm contracted to manage the building.
Commissioners said it was more realistic, considering the track record of the past few years. The budget called for just two midsized concerts with no major ones on the level of Britney Spears in 2009.
The new budget involved some City Council members who insisted on a balanced budget.
City policy requires individual departments to submit balanced budgets, and a task force charged with reforming the Alerus Center had earlier said in its report that "the commission is strongly encouraged to stay within its budget and strive to create a reserve fund." Several present members of the commission were on the task force.
(The Herald erred in an earlier story when it quoted a draft of the report.)
The budget next goes to the council for final approval as part of the city budget.
The original budget had responded to significant declines in the number of concerts and other arena events with deep cuts to the events center work force.
Layoffs and the elimination of unfilled positions saved the events center $225,000 in full-time labor while reducing part-time staff saved $40,000. That's compared with actual expenditure in 2009.
Swanson said he's consolidated different jobs so there aren't any members who work exclusively on the arena side. Concessions staff, for example, also helps out in the kitchen, he said.
But these cuts were not enough to offset the projected drop in revenue from lack of events. Advertising and sponsorship were expected to drop $125,000, suite leases $39,000 and parking $52,000.
Revenue totaled $4.1 million and expenses $4.2 million.
Trying all options
The new budget modifies the original in a number of ways.
First are the projected additional concerts, which Swanson said would include two concerts with attendance of about 5,000, two with 4,000 and one with 3,500. These have a variety of effects on revenue, from adding to earnings from parking to concessions to equipment rental.
Second, marketing spending was slashed by $21,000. The Alerus Center uses this money to promote itself in trade publications or advertise its own events.
Swanson said he didn't expect a big impact to the building, stating that having more events would allow the building to get its name out there at minimal cost because promoters usually pay to market their events.
Third, the budget assumes the Alerus Center will be able to sell another $30,000 in ads on its electronic reader boards. It already does so, but only to building sponsors. City law caps the number of such boards. There's an exemption for businesses to advertise their own offerings on their own reader boards or the offerings of building sponsors.
Council President Hal Gershman and council member Doug Christensen, who heads the finance committee, told commissioners they would initiate a change in city code to legalize the selling of ads on electronic reader boards. At the very least, they said the events center could ask for a minimal sponsorship fee from interested advertisers.
Commissioner Curt Kreun, who also sits on the council as head of the safety committee, said he could not support circumventing the law. He had helped negotiate a compromise between billboard advertising firms eager to do more business and city officials fearing garish signs would swamp the city. "The angst and anxiety in the community is not worth $30,000."
The intent of the exemption, he said, was business reader boards would not be treated as billboards.
Commissioners ultimately approved the budget with the $30,000 but did not specify how it would come about, leaving that to the council.
More budget changes may come at a later time.
Christensen told commissioners his committee would examine the building repair and maintenance line item to see if any expenditures qualify as "capital improvements," which are major building improvements that can be funded by the ¾ percent sales tax dedicated to the Alerus Center.
The tax may be used only to pay off the debt on the facility and for building improvements.
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