Say Anything Blog

Figures don’t lie, but liars figure:

When visitor spending is considered, the Alerus Center is anything but a loser financially, according to a study completed by a UND economics professor.

Alerus Center has lost money for four years in a row based strictly on operational revenue and expenses. But Blackwell said he can show “the Alerus earned a substantial profit” using revenues from increased tax collections.

The Alerus Center is profitable overall because of the increased tax collections it has generated, he said.

The event center’s operational deficit during the study period year was about $245,882, or $1.03 per attendee. When $759,077 in Grand Forks tax revenues generated by the Alerus are figured in, the events center actually had a net profit of $513,179, or about $2.14 per attendee, according to Blackwell.

Visitors spent an estimated $14.5 million outside the Alerus and an estimated $1.8 million inside the facility during the study year.

Studies like this really make me mad.  I don’t know that this is the case, but in the past the city has hired outside “experts” to give them the answer that they want.  And these experts don’t come cheap although their work can be blown apart in a minute.  I haven’t seen this study and I wasn’t able to find it on the web.  I think though that I can point out enough errors in this ‘study’ that my point will still be valid even so.

First of all the figure that they call an operating loss is padded. According to Grand Forks Herald ace reporter Tu-Uyen Tran the Alerus bookkeeping system actually counts over $300,000 generated by a hotel tax as operational revenue.  The first thing out of their mouths is a lie when they under report the actual Alerus Center loss by over 50%. 

Another major mistake they make is that they assume that if the Alerus wasn’t here that none of these people wouldn’t visit Grand Forks anyway.  They want us to believe that if someone would no longer visit the city if they’re weren’t an Alerus.  That’s clearly not the case.  Many of these people would visit the town and spend as much or more (shopping) then they do when they visit an event at the Alerus. 

I’m sure that we get some extra visitors because of the Alerus, but I’d bet that without it most of that money would still be spent in town.

The biggest error made by the person doing the study is the fact that he counts all of the benefits, he doesn’t count the cost.  According to the State Tax Department Grand Forks City had 787,538,513 in taxable sales in 2005.  The three quarter sales tax for the Alerus would have cost the locals $5,906,538.  That’s money sucked out of our economy that goes right out of town to the bondholders. 

So we’re paying nearly six million dollars a year to get a return (according to this study) of $759,077.  To claim that this is a profitable situation is outrageous.

I’d also like to know how he came up with $759,077 in tax revenue.  The story claims that visitors spend 16.3 million dollars while they are visiting here.  The city sales tax is 1.75%.  That would work out to only $285,250.  Where does the other half million in tax revenue come from.  (Maybe they have a point, but they should release the study if it was financed with city money).

This also was in the Herald’s story:

Blackwell’s study found that attendance for the city of Grand Forks recreational events has increased by about 289 percent since the Alerus became operational almost six years ago.

Yeah, that’s great.  How much of that increase is because of the opening of the Ralph Englestad Arena?  When you’re doing a study on the Alerus Events arena you shouldn’t take credit for the opening of another venue.

The Alerus commission delayed the release of the event’s center financial statements.  I’m guessing they wanted this study to get out to take some of the sting out of that release.  I don’t think it’s going to help.

To summarize, the study is flawed because the city government counts a tax subsidy as operating revenue, the study assumes that nobody would come here except for the Alerus, that the study ignores the economic loss of the tax we are paying for this center while counting all of the benefits.  The study also counts attendance at the REA as a benefit of the Alerus.

It’s time for the city to come clean and tell us the truth. 

When the Alerus was built there was no Blogs.  It’s my opinion that if there had been this resource the city would have had to be a lot more honest with the citizens in order to get an events center built.  I feel like putting down the facts as I remember on the extended entry just to get them off of my chest.  Since this happened ten years ago I may have some errors and if so I’d appreciate some help getting a correct record, since we won’t get it anywhere else.

I’m going to do this pretty fast just to get it out there.

The city council proposed an event center costing from 43 to 49 million dollars.  They told us that a 3/4 cent city sales tax would cover this.

The voters of GF agreed that this event was necessary, (on balance that included me).  The measure passed about 60-40.  This was the last time we heard about an events center for 43 million dollars.

After the election the city council decided to add in a lot of goodies, the most expensive one was to turn it into a football stadium. 

Two weeks after the city election (June) the city announced that they couldn’t build it for 49 million but it would cost 65 million.  They had known about this for months but held it until after the city council election.  Their excuse was that they were reevaluating the cost of construction.

The city whittled down the project to 57 million dollars and put it to another vote of the people.  They never did tell us what was in or wasn’t in the proposal.  At community meetings a relative of mine was told that the 57 million dollar version had a kitchen.  Unlike the first election they didn’t put a price range on the measure.  This measure passed by about 51 to 49%.

The day after the election it was let known that the city didn’t feel bound by the 57 million dollar promise and they were going to add a few things back in, including the kitchen.

In 1997 the flood hit and that pushed the project back a year.

During construction there was a major miscalculation or accident.  The roof beams being mostly up and unsupported by a roof toppled over domino fashion.  The city immediately assumed financial responsibility rather than holding the contractors (who were responsible obviously) responsible.  Fortunately the city’s insurance paid for the accident.

Towards the end of the construction period the city realized that they didn’t have the money to pay for signage.  They then claimed that signage isn’t something normally paid for in the construction budget but rather an extra that’s added on in the end.  The city had to take a further loan of $2,000,000 to put up some crummy signage that detracts from the building today.  Later the Alerus commission complained that they shouldn’t have to pay off the sign because that should be be part of the construction.  Hmmm?

The center opened up in 2001 at a price over 80,000 nearly double of the lower range they promised us.  That didn’t include the millions and millions of dollars of infrastructure improvements that were paid in other ways.  To date the roads they put in for the Alerus are the most underutilized in the city.

That’s my quick and dirty record of the Alerus Center.  There was some naming controversy but who really cares?

Prior to this starting I saw that Grand Forks definitely had a need for an events center.  We didn’t need it so bad that it was worth lying time after time to get.