City of Grand Forks Says Alerus Center Finances Were Misrepresented

UPDATE: Reporter Sam Easter now insists that the City of Grand Forks did not initiate a response to the SAB blog posts. This is at odds with communications he had with me, both via email and via telephone, where he referred to an “accusation” and a “complaint” about the post. Also, his article linked below describes the city as responding to the blog post. Easter now says that’s not what’s happened, despite his reporting and earlier representations. This post, and its headline, has been updated to reflect that.

Long time readers of SayAnythingBlog.com are familiar with The Whistler. He’s a Grand Forks resident who is active in the comments section, but also has contributed many posts to the blog over the years. Not many in recent years, but earlier this week he did write something about the city-owned Alerus Center in Grand Forks.

He pointed out, accurately, that the facility posts big financial losses year after year and wouldn’t continue to operate without a heavy taxpayer subsidy.

The City of Grand Forks didn’t like that, and said as much to reporter Sam Easter.

“In providing the documents, city officials were responding to a lengthy post appearing on Rob Port’s ‘Say Anything’ blog,” Easter reports.

This graph, indicating that the Alerus Center has only operated in the black for two years in the last decade, was published by the Herald and makes the point of the original post:

What you’re looking at is millions upon millions of dollars in losses before we even begin to talk about the deprecation of the value of the facility reported in the city’s financial audits, something mentioned in the original post.

But according to the City of Grand Forks, that’s ok. The taxpayers make up the difference:

Historical financial statements show that, across the last decade, the bottom line for day-to-day operations has fluctuated wildly, from more than $700,000 in the red in 2009 to about $470,000 in the black in 2012 back down to a loss of more than $920,000 in 2017. It recently ticked up from that decade-lowest mark to a loss of about $423,941 during 2018. […]

But the operational fund has been buoyed all along by sales tax revenue from that 0.25 percent hospitality tax, where income has grown exponentially between 2009 — when sales tax revenue to the fund was about $387,000 — and 2018, when it brought in $576,495. That’s an increase of nearly 50 percent.

And that’s a big reason the bottom line for the operational fund has gone up almost every year since 2009, starting at $387,000 in the hole and ending last year at almost $2.1 million.

The operational fund has gone up almost every year since 2009 because the tax subsidies have gone up every year, now totaling more than a half million dollars per year according to the latest numbers.

The Alerus Center folks want to treat the tax subsidy as though it were revenue they are generating. But it’s not. It’s revenue the city government is generating by levying a tax. This is my quote from the piece:

“Telling the public the Alerus Center is successful and profitable leaves the impression that it is generating enough revenue from its operation to cover its expenses,” he said. “It does not. It receives a subsidy, and counting that subsidy as though it were generated revenue the same as ticket or concessions revenue is just plain dishonest.”

If the city wants to argue that it’s ok if the Alerus Center operates in the red most of the time, and leans heavily on tax subsidies, because it brings events and other sorts of commerce to the city then fine. Not everyone buys that this trade-off is worth it, but at least that’s an honest argument.