Grand Forks city leaders will discuss the Alerus Center's deficit budget when the City Council's finance committee convenes at 5:30 p.m. Monday at City Hall.
Last week, the commission that oversees the city-owned events center agreed to a projected budget that shows a loss of $134,000 at the end of 2011. It was the first time the commission did not budget to break even since the building opened in 2001.
Expenses are projected to total $4.2 million and revenues to total $4.1 million, which includes $390,000 from the ¼-percent hospitality tax subsidy.
The change in budgeting philosophy coincides with the recent infusion of three new members into the seven-member commission. From last week's budget discussion, it appears the new philosophy is that it's better to budget realistically than to stick to the break-even orthodoxy, which has almost never panned out.
This is somewhat at odds with a recommendation from a task force convened late last year by the mayor to reform the Alerus Center. That task force, which included the three new commission members, among others, and the entire City Council, said the events center should break even without the subsidy, which should be treated as a kind of reserve.
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This has never happened in the history of the building.
Commissioners said last week that a deficit budget was much more realistic given what they know now about concerts and conventions in the year ahead. The trend in recent years has been toward shrinking revenue from major concerts -- there were big losses from unexpectedly low turnout at the Britney Spears and Neil Diamond -- and expanding revenue from major conventions.
The single biggest revenue item in 2011 is catering with $1.3 million. Building rentals was expected to fetch only $432,000. There are two smaller concerts expected, but no major concerts.
Also on the agenda for the finance committee:
- New downtown parking assessments to pay off the remaining $197,000 debt on the Corporate Center parking ramp. Opposition from downtown businesses, which say they don't use the ramp, has caused the council to back off in other years, paying for much of the debt from other city funds. In one instance, the city paid 60 percent of the debt, while businesses paid 40 percent.
The finance department said it's time for a new assessment, as there are no other funds available.
- The strategy for expanding the downtown Renaissance Zone tax incentive program. City staff said it's looking for direction from the council. There has not been an application since 2008, and developers working on two new apartment buildings at the Civic Auditorium haven't bothered to apply, despite an expansion of the zone to include that area.
Reach Tran at (701) 780-1248; (800) 477-6572, ext. 248; or send e-mail to ttran@gfherald.com .
