Comments on MPRB financials and the recommended 2007 budget

from Shawne Fitzgerald…

Per the 2005 MPRB Audit, the MPRB Park Operating Enterprise Fund realized a net profit of $490,643 on gross revenues (sales) of $11,228,317. The Enterprise activities in this fund are Park Refectories/concessions, Parade, parking, Colombia Manor, Nicollet Island Inn, the golf courses and refectories, boats & related, and recreation. Another $550,000 gross revenue in Rental and Commissions is shown in the General Fund – net income was not provided in the audit. So, after struggling with commercialization and privatization projects for 5 years, the MPRB net revenues were $1 million or less in 2005.
The MPRB has a major obligation in the Enterprise area – debt service on the $14 million bonds sold for Fort Snelling Neiman (including tennis center, golf course, athletic fields and the 201 Building). Annual debt service is just over $1 million – there’s about 15 more years to pay off the bonds. In 2006, the MPRB purchased the Edison Youth Hockey Arena (despite chronic losses at Parade Ice Arena and with MPS hs teams being reduced from 6 to 2) – this mortgage so it is another longterm obligation. MPRB enterprise activities, as presently structured, are unlikely to generate funds for MPRB’s core operations.

The Superintendent’s proposed 2007 budget would radically change MPRB enterprise efforts by opening parkland to developers with site and type of business to be chosen by the developer. Staff will “iss[ue] a request for proposals for additional concessionaires.” Staff explained that they seek proposals to build concessions (businesses), that they will ‘see what is out there.’ Revenue from this initiative is not included in the 2007 budget.

The MPRB proposes to build a miniature golf course in Northeast Park adjacent to Lupient Water Park so both facilities will use the same entrance and security. Anticipated revenue is $100,000 – gross or net was not stated. Capital costs were not included. No market study, community/needs assessment, or business plan was included.

The MPRB proposes to site about 20 food service carts throughout the system. It was mentioned that MPRB would own the carts – no capital budget was included. Anticipated revenue: $50,000 – gross or net was not stated. No market study, community/needs assessment, or business plan was included.

The MPRB proposes to sell merchandise from the MPRB website. Anticipated revenue: $30,000 – gross or net was not stated. Again, no market study, community/needs assessment, capital budget or business plan was included.

The MPRB will issue an rfp allowing a promoter willing to give the MPRB $50,000 use of parkland for a new major event. No details provided.

Sale of 201 Building at Fort Snelling Neiman. Liens against this property were settled for $945,000 in 2006 – MPRB borrowed from Internal Services Fund for payoff and the money is to be repaid by May 2007. The MPRB has spent about $3 million on this property. The site has been listed for sale since summer – turns out the MPRB does not have clear title to the entire parcel, the federal government owns a piece of it. Staff is projecting $4 million from the sale.

MPRB and Minneapolis Parks Foundation

The MPRB has organized the Minneapolis Parks Foundation, a 501(c)3 nonprofit corporation. The initial Board was recruited by MPRB staff – subsequent directors are appointed by the Foundation Board. There is no membership – the public cannot influence the Foundation. MPRB Commissioners have no control of the Foundation including how Foundation funds are spent. In 2007, the MPRB budget proposes to provide the Foundation with part time staff to fundraise for the Foundation.

MPRB and Park Dedication Fee

Enabling legislation passed in 2005 would allow the City and MPRB to charge a $3,000 per unit park dedication fee on new construction. This is incredibly regressive as the cost would be passed on to owners or tenants. Rolled into a 30 year mortgage, the actual cost of the fee more than doubles with interest. Since the upper income residential market is facing a glut, this fee would be assessed on projects in middle- and working-class neighborhoods for the foreseeable future. It’s unbelievable that DFL and Green elected officials would actually consider doing this.

Key Areas Not Addressed

Trees – Reeling from the Dutch Elm crisis with the ash borer expected to take out 25% of our urban forest, the Minneapolis Tree Advisory Committee recommended a 2007 increase of $4 million for stump removal, replanting, and proactive planting now before the ash trees are lost. Trees were the number one priority listed by citizens returning MPRB comprehensive plan survey. Funding for the urban forest to remain pretty much flat – not even enough to deal with the stump removal backlog.

Self Insurance Fund – Except for health insurance, the MPRB is self-insured. At 12/31/05, balance in the self insurance fund was a negative-$2.8 million with about $8 million in outstanding liabilities – most of this for workers comp. Typically, a government self insurance fund has a reserve equal to liabilities. The MPRB budget proposes to leave self insurance underfunded in 2007.

Underfunding self insurance is a concern for by the end of 2005, the MPRB had exhausted its reserves. Total fund balances were $5 million with $3.4 million in Park Grant and Dedicated Revenue Fund (restricted dollars). Otherwise, there was $1.5 million in the general fund and $197,000 in internal services fund (and almost half of this small fund was used in 2006 to pay the lien settlement at the 201 Building.)