by Matt Rosenberg November 16th, 2010
SUMMARY: An indoor arena in Wenatchee, Wash. owned by an intergovernmental agency is unable to generate sufficient revenues to cover its combined operating expenses and debt service obligations, and the agency needs to devise a new plan to make the facility solvent, according to a new report from the Washington State Auditor’s Office.
BACKGROUND: The Wenatchee Regional Public Facilities District was formed in 2006 through an inter-local agreement between Chelan and Douglas counties, and seven cities including Wenatchee. Core duties were to finance, oversee construction and assure the financial feasibility of Town Toyota Center. Originally named the Greater Wenatchee Regional Entertainment Center, the facility was completed in fall of 2008.
Supporters said it was needed to boost the area’s competitiveness in the convention industry and to replace aging ice arenas; that it would break even at worst; and no new taxes would be required after completion. It is home to a junior league hockey team, the Wenatchee Wild, and the Wenatchee Valley Venom of the Indoor Football league.
The 4,300-seat facility is also used for ice skating, curling, trade shows and other events. Since the recession hit, sales tax revenues have declined. Bookings have been low, compared to comparable facilities in the state. These factors have contributed to the facility’s fiscal problems. If the seven towns and two counties each formally consent by Dec. 23, 2010, then a City of Wenatchee proposal for a .1 percent sales tax hike to halve the city’s annual debt obligation for Town Toyota Center could go to district voters in February 2011.
KEY LINK: Washington State Auditor, Financial Statements Audit Report, Greater Wenatchee Regional Events Center Public Facilities District, (Town Toyota Center), 11/15/10.
- The period covered in the audit is 1/1/09 to 12/31/09, although the district reports in the audit that financial problems identified through that period have persisted into 2010.
- The audit found that the district lacks sufficient financial resources to fund current operations and long-term debt. The district’s operating losses were $1.6 million in 2008 and $2.5 million in 2009.
- The district has long-term debt of $42 million via three bond anticipation notes which require annual interest payments of $2.19 million until they mature in December of 2011, but the district is positioned to pay only $580,000 per year, using sales tax revenues. The City of Wenatchee has agreed to lend the district funds to pay the remaining bond interest due.
- The District signed a contract in September 2006 with Global Entertainment Corporation for management and marketing services. “Global projected revenues to be significantly higher than the district actually generated, resulting in insufficient funds to cover both operating expenses and debt obligations.”
- The State Auditor’s Office recommends that the district establish a detailed written plan to address cash flow challenges. The plan should be approved by the district’s board and actual results carefully monitored.
- The District’s reply to the state auditor, in the audit, notes that the district terminated Global’s contract in September 2009 and hired its own general manager. Financial results for 2010 will be improved from 2009 but still short of amounts needed to cover debt service obligations, according to the district. The district and city are reviewing options and will deliberate and approve a plan in open public meetings of the district’s board. Approved plans will be stated in writing and monitored.
“Independence, Global Part Ways Over Events Center,” Independence (Mo.) Examiner, 10/23/10.
“Wenatchee Cuts Arena Tax Request,” Wenatchee World, 10/1/10
“The Perfect Storm Hits Toyota Town Center,” Wenatchee Mayor Dennis Johnson, Wenatchee World, 8/17/10
Memorandum to Dennis Johnson, Mayor, (and) City Council Members From City Staff on minimizing city General Fund outlays for events facilities and visitor marketing, 5/3/10