Financial questions at Northern Lights
Late bond payments, missed reports raise conerns
ALPENA — The organization that manages Northern Lights Arena withheld five months of bond payments over a disagreement with Alpena County over nearly $15,000 in work done at the rink.
After questions from The News, the management group, Northern Lights Arena-Community, on Tuesday made the required payments, saving the county from having to dip into its reserve funds to pay the arena’s bond debt.
But that is not the end of questions surrounding finances at the arena, which is owned by the county.
Monthly financial reports, for example, haven’t been submitted to the county Treasurer’s Office since February, causing some concern among the county Board of Commissioners.
The arena is supposed to pay $3,174 a month for its portion of bond debt taken on for 2013 capital improvements to improve the energy efficiency of several county buildings. Each facility pays its share of the overall bond cost back to the county.
The bonds won’t be paid off until September 2028. The arena’s bill — equal to about a third of the overall bond costs — will go up each year until it peaks at $6,554 a month in 2028.
A CHANGE OF COURSE
Arena Manager Keli Werda said in an interview with The News on Monday that Northern Lights Arena-Community made its bond payments the last couple of months, but withheld the previous five months while her group negotiated a new contract with the county. Payments also were withheld because the county had not reimbursed Northern Lights Arena-Community for repairs and purchases made for the facility, she said.
The county keeps $1 per ticket sale and a share of arena rental fees and deposits that money into a surcharge fund meant to refund Northern Lights Arena-Community for repairs or replacements of the original structure or items deemed critical for operations. It takes a two-thirds vote of the county Board of Commissioners to reimburse the management group.
Werda said Monday the arena requested repayment for repairs and purchases made in 2017 through the first part of this year, but the county has yet to release the funds. She said that money is needed to catch up on the bond obligation.
“We gave them all of the documentation and all they have to do is cut us a check and then I will turn around and cut them one,” she said Monday. “We have paid for June and July and intend to pay for August. When we get the reimbursement we can catch up for the other five months.”
County officials said they need to save that surcharge fund for large repairs, and the arena isn’t doing enough to replenish what it takes out. Officials also are still working to verify some of the arena’s requests.
After the interview with The News on Monday, the arena changed course on Tuesday and dropped off a check at the courthouse.
“The bottom line is, if it dragged out any longer, it would reflect negatively on us and all of the positive things we do every day to keep this place open to the public,” Werda told The News on Tuesday.
Northern Lights Arena-Community, a nonprofit, has managed the arena since 2013 and leases the building for $1.
After months of bargaining between the management company and the county, a new, three-year deal, with a pair of one-year extension options, was signed in May.
The arena is a staple for events both on and off the ice, attracting people from all over Michigan.
Yet finances are a challenge, affecting day-to-day operations at the arena and the county’s budget.
As of the end of May, the management company had only $15,634 in its checking and savings, though it has budgeted about $20,000 in financial pledges and other owed revenue that is still outstanding.
Werda said the arena is doing better financially this year than last, but that each day is a struggle to make ends meet.
She said that, despite the low amount of operating funds, the arena is nearly $30,000 above budgeted revenues and nearly $7,000 below the projected expenses from the end of July 2018 through the end of May. The arena’s fiscal year runs from July 1 through June 30.
Werda said the arena is holding its own, but described finances as “shaky” and margins slim. She said the $38,090 a year in bond payments handcuff her organization, making it a challenge to do things such as market the arena or hire needed help.
“Right now, at the arena, employees wear multiple hats and share job duties to be sure jobs and projects are competed and customers and users are serviced properly,” she said.
Werda said finances would be stronger if not for the harsh winter Northeast Michigan just got through, causing high utility bills and a loss of ice rental income when the arena closed because of bad weather.
“We were closed an unprecedented amount of days this winter,” Werda said. “How do you make up for that? We are doing everything we can. We aren’t looking to bank a lot of money — and, as a nonprofit, we can’t — but we want to be able to do more than just get by.”
Werda said the loss of the Alpena Community College hockey team led to a loss of ice rental, which also impacted the bottom line. The college team went defunct last year.
‘THEY AREN’T MAKING ANY MONEY’
County officicials, however, say they lack a clear picture of the arena’s financial condition.
Treasurer Kim Ludlow said the last time a monthly finance report was filed was in February. Those reports help the county ensure bills such as water are paid in full and on time, so the county doesn’t end up with an unexpected expense.
“Right now, we aren’t seeing what is being paid, because there are things that could fall back on the county because we are the owners of the building,” Ludlow said. “We need to be able to make sure everything that they need to pay, is being paid.”
Alpena County Commissioner Brad McRoberts, who is on the nonprofit’s board, said he is relieved the bond payments have been caught up. But he agreed the county is in the dark about the rink’s revenues and expenses.
“We really haven’t gotten any documentation from them, so we don’t know what the financial situation is,” McRoberts said. “Nothing is being passed on to us, but I think they will start doing it. I hope.”
The county allocates little money to the arena, as the managing group pays for maintenance, salaries, utilities and other operational costs with revenue from the arena. The group receives little funding from the county’s Youth and Recreation millage to help ease the financial burden, like the Plaza Pool, another county-owned facility, does.
The arena depends on public and private donations, sponsorships, and volunteers to keep the doors open. Werda said her organization intends to request operational funding for next year from the Youth and Rec board.
Werda said employees, board members and supporters of the arena take care of many issues with the aging building and don’t charge the county, though some of the repairs would be eligible for reimbursement.
“Nobody knows or sees that, but that saves a lot of money coming out of the surcharge fund,” Werda said, referencing the fund from the county’s share of ticket sales. “There are a lot of things we do in-house.”
Ludlow said that, as of Wednesday there is $128,000 in the surcharge fund. That amount would not cover a large repair such as a roof, she said.
In 2014, the arena deposited $19,219 in the surcharge fund, but $10,762 was reimbursed. In 2015, $8,156 was deposited, but all of that plus nearly $4,500 was paid out in reimbursements.
In 2017, $7,912 was added to the fund and none paid out, but the arena’s nearly $15,000 current reimbursement request includes requests covering 2017, as well as 2018 and this year.
So far this year, $4,055 has been added to the surcharge account.
“There is no money being generated,” Ludlow said. “They aren’t making any money and there just isn’t much left in the fund to cover any large expenses.”
Steve Schulwitz can be reached at 989-358-5689 at email@example.com. Follow him on Twitter @ss_alpenanews.com.
Yearly Ameresco Bond Payments for Northern Lights Arena