BEMIDJI 鈥� Just a few days after the Bemidji City Council was informed of the Sanford Center鈥檚 projected $723,000 operating loss for 2023 by ASM Global, it has unanimously approved the reallocation of $100,000 from different funds to cover the deficit.
ASM Global reiterated the Sanford Center鈥檚 situation during a special meeting on Friday afternoon, explaining that due to inaccurate projections and a delay in financial reporting the facility is set to lose $723,000 by the end of the year.
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This number is significantly higher than the $190,000 operating loss ASM Global projected for its first full year, and higher than the $308,000 loss the council had budgeted for 2023.
While the total projected loss sits at $723,000, because some of the amount was previously accounted for in the budget and the existence of reserves for the Sanford Center, the total cash needed to cover the deficit is $150,000.
For that, ASM Global offered to refund 50% of its management fee for the year, amounting to $50,000. The remaining $100,000, it suggested, would be reallocated from the Sanford Center鈥檚 marketing and capital improvement funds.
Some councilors expressed concern about taking money from either fund and the impact it could have on the Sanford Center鈥檚 performance, though they admitted there seemed to be few alternatives.
鈥淚 am very concerned about allocating money from our capital improvement fund, but at this point, I鈥檓 not sure we have other options,鈥� said Ward 4 Councilor Emelie Rivera.
Council discussion also focused on steps that could be taken to prevent similar situations from occurring in the future, including requests for more accurately following reporting deadlines and improved communication.
Ward 1 Councilor Gwenia Fiskevold Gould asked if there was a way to ensure that city concerns were taken seriously since members of the council and the Sanford Center Advisory Board had brought forward questions about performance early in the year before being repeatedly assured that it would meet its projections.
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鈥淲hat kind of systems do we have in place to prevent this from happening again as a city?鈥� Fiskevold Gould asked. 鈥淚鈥檓 really concerned that we don鈥檛 have proper oversight in place. 鈥� Something I鈥檇 like to see is how ASM can provide assurance that when we flag anomalies on our end they鈥檒l be addressed.鈥�
One step ASM Global has agreed to take to improve communication and accountability includes committing to rolling projections with each monthly financial report. It has also agreed to provide preliminary flash reports on the performance of events and explanations of any variances in budget or finances.
ASM Global has also waived the $36,000 incentive fee it would have received for its performance in 2022, after meeting its goals a year ahead of schedule with a $180,000 operating loss.
Because of exceeding the projected loss for 2023, ASM Global will not earn an incentive fee for this year but could earn one in 2024 depending on its performance.
In its Monday meeting, the council agreed to budget for a $350,000 Sanford Center loss in 2024. If ASM Global performs better than this projection, it could earn a $21,000 incentive fee. If it exceeds it, the company could still receive a $6,000 incentive.
When the council voted to approve reallocating its portion of the funds to cover the $150,000 deficit, the motion passed unanimously, with several councilors emphasizing that this action is not providing additional money to ASM Global.
鈥淭he $150,000 is really shifting money within ASM鈥檚 (budget) lines, we aren鈥檛 sending them additional money,鈥� explained Ward 5 Councilor Lynn Eaton. 鈥淧eople need to know that.鈥�
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During its meeting, the council also updated its policy on sick and safe time to meet state standards for 2024.
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