Steamboat’s recreation enterprise funds require annual subsidies
November 12, 2011
Steamboat Springs — All Steamboat Springs recreation enterprise funds operate at a loss, and all but one will require a general fund subsidy next year.
Because Steamboat's recreation enterprise funds don't support themselves, the Steamboat Springs City Council, city staff, volunteer advisory boards and community members are working to make them more efficient while exploring opportunities to generate additional revenue.
By definition, enterprise funds are supposed to generate enough revenue to meet their expenditures. The city's water and wastewater funds operate that way, for instance.
The 2012 budget, which City Council members approved on second reading Tuesday, includes more than $1.1 million in transfers from the general fund to the enterprise funds that pay for recreation programs and facilities. They are Howelsen Hill Ski Area, Brent Romick Rodeo Arena, Howelsen Ice Arena and the Tennis Center at Steamboat Springs.
The Haymaker Golf Course is projected to lose more than $111,000 next year but will support itself by spending some of its unrestricted reserves to make up the difference.
The programs and facilities are part of the city's Parks, Open Space and Recreational Services Department.
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City Council President Bart Kounovsky said when the budget was first presented Oct. 4 that no entity, whether government or private business, could operate at a loss for very long. He said then that the City Council needed to focus on doing things better.
"I think that would be something we need to look very heavily at, but in all reality, will we get all those funds to match revenues with expenses? Probably not," he said last week. "But that doesn't mean we're not going to continue trying to make them as efficient and customer-friendly as possible."
Enterprise funds history
Deputy City Manager Deb Hinsvark, who also serves as Steamboat's finance director, said that before 2009 the recreation enterprise funds weren't isolated. She said they were part of the city's general fund.
City Council member Cari Hermacinski said at that time that the funds should be separated from the general fund to see whether they required a subsidy or generated a surplus.
"When I came onto the council in 2007, I was stunned by the lack of info we could get for the budget as a whole," she said. "That's changed dramatically since Deb has come on board."
Hermacinski said breaking the enterprise funds out of the general fund allowed the City Council to begin to address the annual subsidies. The city's challenge now is evaluating what recreation options the community wants.
Addressing the subsidies
Several City Council members expressed concern with the operation of Howelsen Hill during the Oct. 4 budget presentation.
City Council member Kenny Reisman wondered whether it was being used efficiently to meet community needs. Former council member Jon Quinn asked whether the historic ski hill could generate additional revenue.
Hinsvark said the subsidy for Howelsen Hill was projected to be about $660,000 next year.
Parks and Recreation Department Director Chris Wilson said he would invite Howelsen Hill user groups, including the Steamboat Springs Winter Sports Club, to a meeting next month to discuss possible revenue generators and the ski hill's use. The city's Parks and Recreation Commission agreed to hear recommendations from the groups at a meeting in January.
"I think we need to be proactive and work with the community," Wilson said.
Stephen Moore, who is in his seventh year as a member of the city's Ice Rink Advisory Committee, said the group discusses the general fund subsidy annually.
The ice arena's subsidy is projected to be more than $193,000 next year but was as low as $35,000 in 2010.
Moore said that in previous years, the ice rink generated additional revenue by renting the rink to the Bridgestone Winter Driving School. He said the committee also has looked into renting the Olympic-size rink for speed skating and curling.
"Theoretically, we'd love to see that place operate on its own," Moore said. "A lot of our meetings are about how we make the ice rink as efficient as possible. That would include reducing the subsidy to zero."
Hinsvark said the Parks and Recreation Department has discussed adding ice bumper cars as a possible revenue generator.
Moore said that could come up when the committee meets at 5 p.m. Wednesday at the Parks and Recreation Department office.
Other recreation funds
The Tennis Center and Haymaker are different than Howelsen Hill and Howelsen Ice Arena because they're operated by contractors.
Anne Small, the city's acting director of general services, said the Tennis Center contract, a three-year deal with three 5-year extensions, was reached with Jim Swiggart in 1994 and expires in March.
Small said the city pays 60 percent of the cost of gas and electricity and performs all upkeep of the facility, including maintenance, landscaping, snow removal and any capital improvements. She said the contract is likely to change when the city issues a request for proposals for a Tennis Center operator in the spring.
"You obviously want your operator to succeed, but you don't want to give away the farm," Small said. "We'll write the (request for proposal) more carefully."
Swiggart couldn't be reached for comment Friday, and the Tennis Center doesn't have an advisory board.
The Tennis Center will require a projected general fund subsidy of $134,998 next year, similar to recent years.
That's not an issue for Haymaker, which has supported its operating loss in recent years by spending unrestricted reserves. But the course is reducing its operating loss, which is projected to be significantly less in 2012 because of a reduction in labor, Haymaker Golf Committee member Tom Ptach said.
Haymaker also negotiated better credit card rates and evaluated other expenses, such as utilities, maintenance and equipment repair, Ptach said. He said Haymaker is optimistic about attracting destination golfers and may consider raising rates as an additional revenue source.
Ptach said it's important that Haymaker stop operating at a loss to save its reserves for future capital needs, such as a new irrigation system in 10 to 15 years.
"Our goal is to build up enough of a reserve so we don't have to turn back to the city and say … we need money out of the general fund," he said.
The community's decision
Hinsvark said what recreation amenities Steamboat provides will be up to the community.
In addition to ongoing efforts to get feedback from volunteer advisory boards, the city would reach out to the community in other ways, Hinsvark said. For instance, she said city staff is developing a game that residents can play online.
By providing a hypothetical situation in which they have less money than what it costs to operate a program or facility, they will have to make a choice about what to keep and what to cut.
It's a way of surveying the community, Hinsvark said. She said the game soon should be added the city's website, http://www.steamboatsprings.net.
Hinsvark said the recreation funds are paid for by the community's money, and the community should be able to decide how it's spent.
"The citizens' tax dollars have been invested in these entities," Hinsvark said. "Truly, citizens' desire to have them keeps them here. As long as citizens continue to support them with their tax dollar, they'll continue to operate. But at the same time, we feel an obligation to reduce the drain on the citizens' tax dollar to ensure they function as well as possible."
— To reach Jack Weinstein, call 970-871-4203 or email jweinstein@SteamboatToday.com