Bemidji Sanford Center short: VenuWorks seeks additional $194,000 for 2011
VenuWorks needed cash - or else it wouldn't make payroll.
The Bemidji City Council Monday evening very reluctantly approved an additional $194,327 for VenuWorks, the firm hired to manage the city-owned Sanford Center.
No one from the VenuWorks management team attended the meeting. City Manager John Chattin said they were at a corporate function in Ames, Iowa.
"I'm disappointed," said Councilor Ron Johnson. "The fact that they're not here probably shows just how important we are in the pecking order."
A letter dated Sept. 26 from Andy Long, regional vice president for VenuWorks, said the firm needed an additional $194,327 in addition to the $338,718 originally approved by the council.
"Our cash shortfall has been primarily due to the lower-than-expected signage and sponsorship sales as well as per-event revenues," the letter states. "We are currently working to improve the year-end results through on-site and corporate efforts and will see our advertising numbers improve over the next year."
Anger and frustration flowed rampant throughout the discussion, which lasted about 30 minutes during a work session.
The council grudgingly agreed to allocate the funds on a 6-1 vote. It set a special meeting for Oct. 11 during which VenuWorks management will face the council's operational questions.
Councilor Greg Negard said it would be a "come to Jesus" meeting.
"My question is, where is (VenuWorks') responsibility?" he said.
"They're fiddling while the events center burns," said Councilor Roger Hellquist, who voted against the motion. He said he would not support the motion based on the way VenuWorks has worked with the city.
"It's their payroll, their issues," he said. "Let them taste the heat."
Jenni Hillman, the finance director for the Sanford Center, attended the meeting at Chattin's request; VenuWorks management did not know she was attending. Hillman does not make operational decisions at the Sanford Center, so she was on hand solely to answer specific financial questions.
She confirmed that there would likely be some late fees and interest to be paid on overdue bills, even though she is negotiating them.
"This is the city's image," said Councilor Kevin Waldhausen, noting that the situation was going to reflect badly on Bemidji's name. "We can't have that."
A variety of factors appear to have contributed to the deficits. Advertising, particularly, has not met expectations, according to council discussion, and Chattin said non-event part-time payroll has been higher than expected.
Negard said the news about the deficit was exactly what he was afraid of while the center was being built.
"Do I love going to the Sanford Center? Personally, I love it. But we're not getting what we need out of it," he said.
The additional funds will come from the city's reserves.
VenuWorks itself, according to Chattin, receives $9,000 a month from the city of Bemidji for its services. The firm also gets a percentage of catering profits and advertising.
He said he has directed Hillman to compile information on all of the payments paid by Bemidji to VenuWorks.
The contract also allows for performance payments, but Chattin said he, obviously, does not see that happening soon.
Grand Forks, N.D., and VenuWorks terminated their contract in August for the operation of that city's Alerus Center. That termination will be effective Dec. 31. VenuWorks, which has managed the facility since 2001, is projecting a loss of $271,000 this year, according to the Grand Forks Herald. VenuWorks and Grand Forks nearly separated in 2007, but the management firm then presented a better contract.
Bemidji representatives said they expect that VenuWorks will "share in the pain" in Bemidji, too, for the deficits at the Sanford Center.
Bob LeBarron, the executive director of the Sanford Center, resigned last week to pursue other interests.
"I was a little upset because one of the reasons that I think Bob had in his resignation letter was the city was too involved," Chattin said. "I certainly believe the city hasn't been nearly involved enough."
Waldhausen, noting that LeBarron's last day will be Oct. 3, then asked, "Where is Bob?"
Chattin said he was not really invited to the meeting. He said the council's operational question should be answered by VenuWorks management.