For release June 23, 2016:
This post has been created to document an investigation into the management and accounting for usage of the Festival Hall by Cedar City, and also that of the Heritage Center. As an issue of important transparency, the author believes that budget line-items can only be clear and accountable when there are procedures in place to ensure that there is accounting consideration recorded any time there is cross-usage of public assets by government employees, departments, etc.
Background of Investigation:
During City Council Meeting on June 1st, 2016 there was a discussion regarding employee free passes at city-managed facilities. The Council had planned to discuss changing the personeel policy to allow elected officials the same perk as full-time employees, as well as allowing tenured city employees that same perk for 5 years after their city employment ends.
There was some public input mostly against the City employees using the public facilities for free, and significant public input demanding that elected officials not vote themselves that benefit. There were also City employees (specifically police officers) who voiced their support for the current policy that City employees get the benefit of free passes at the golf course, aquatic center, and arena.
Councilman Cozzens expressed his support for employees getting the benefit, but not politicians and not retirees. He was unable to get a second to his motion to pass the changes without those parties getting the benefit. Councilman Rowley, who has voiced support with Cozzens' position, was unable to attend that meeting. The others voted to pass the changes while only excluding politicians from the perk.Cozzens was the lone dissenter and later reaffirmed his support for the benefit for employees, but not politicians or those no longer in the City's employ.
During City Council Meeting on June 8th, 2016 the mayor of Cedar City Utah announced two retirement parties to be held for Cedar City employees Rick Holeman (city manager) and Chief Addison (police chief) to be held at the Festival Hall, inside the Heritage Center.
On the agenda that evening the City Council was set to review and discuss the City's new budget. According to the budget that was to be discussed that evening, the Heritage Center has had about a $306,000 deficit (381,931 expenses minus 76,000 fees) over the previous year and is planned for the coming year as well.
Brad Green, who was present at both meetings, inquired regarding the consideration provided to the Heritage Center's budget by the City when using the facility for City functions such as these retirement open-house events. City attorney Paul Bittmenn explained that Iron county owned the Festival Hall and allowed the City to manage its bookings and schedule and in return the City was able to use that facility free of charge.
We reached out to the City to request a copy of the contract affirming such agreement. The City speedily provided a copy of that agreement and filed it also included the request and response in their GRAMA records. The contract can be found at this link:
Interlocal Cooperative Agreement
Transcript of emails requesting and providing information:
Thanks to Cedar City for the transparency and cooperation
Message from Brad Green to Paul Bittmenn, City Attorney; dated June 22
Paul,
I was wrong about having your email. It was Jason with whom I had communicated by email. I hope this is the correct email address to use.
Will you please send me a copy of the contracts between Cedar City and Iron County regarding Festival Hall and The Heritage Center? Everything you think is relevant to the management by the city of the Festival Hall and the City's usage agreement would be helpful for me to understand that policy. Please let me know if you have any questions.
Thanks!
Brad Green
Message from Paul Bittmenn, City Attorney to Brad Green; dated June 23
Mr. Green,
Attached is the Festival Hall agreement between the City and the County. The agreement does not include the Heritage Center.
Festival Hall is owned by the County and per the agreement it is managed by the City. The Heritage Center is owned and operated by the City.
I think I gave out some bad information a couple of weeks ago in response to your question related to the City not paying for the use of festival hall. In response to the question I incorrectly told you that it was covered in the agreement between the City and the County. It is not. The County has the ability per the agreement to use space in festival hall for a nominal charge.
If you have any questions please call.
Renon,
Will you keep a copy of Mr. Green's request and this reply with the GRAMA requests.
Thanks.
Paul
Message from Brad Green to Paul Bittmenn, City Attorney; dated June 23
Paul,
Thank you for your speedy response! I'll read this through to satisfy my curiosity. I do have a question about what you described in your email. You wrote that the county pays a nominal charge to use Festival Hall, which it owns. Is there a fee paid to the county when the city uses the Festival Hall? If the city uses the Heritage Center, is there a nominal charge that is transferred to that facility's account from the relevant city department using it?
My curiosity on this subject is specifically that the heritage center continues to show deficits on the budget, and i wonder if the accounting just needs to be done differently at times. I also wonder about the county's investment and revenue from their portion. Any information you can provide to help me understand is appreciated.
Thank you very much!
Brad
Message from Paul Bittmenn, City Attorney to Brad Green; dated June 23
Brad,
I don't think I can be much help when it comes to the accounting.
Your first question was "is there a fee paid to the county when the city uses the Festival Hall?" The answer is no. Cedar City receives all revenue generated by Festival Hall. Cedar City has the financial burden of operating festival hall and the rentals offset some of the cost associated with operating festival hall.
Your second question is "if the city uses the Heritage Center, is there a nominal charge that is transferred to that facility's account from the relevant city department using it?" You may want to ask Jason Norris this question as his department would do the relevant transfer. I don't think we transfer from department to department, but again you may want to ask the Finance Department.
You expressed curiosity about the County's financial return on their purchase of the building. A couple of thoughts. First, the County does have the cost of the building, but they don't have the operations costs. So the City has operations costs and the County has capital costs. The building was purchased and is operated with the intent to bring in conventions, festivals, and other similar uses. These uses typically generate tax money. Both the City and the County receive sales tax revenue. Part of the idea behind the building bringing in business is it will increase tax revenue to the governmental entities.
I hope this helps.
Paul
Message from Brad Green to Jason Norris, City Recorder; dated June 24
Jason,
Will you please provide for me some details on the financial aspects of the Festival Hall and the Heritage Center? I'm trying to understand the current agreement between the city and the county as well as the accounting of usage by the government of these facilities.
Specifically, I'm hoping you can provide me a basic P&L of each entity (Heritage Center & Festival Hall) from the City's perspective as a property manager. I realize that the county owns the Festival Hall, but as a property manager, the City should have an accounting of rental income and management and upkeep expenses. If the information is readily available, will you also provide me with a ledger of reservations and usage fees for each-- including usage by public entities without a fee? I am also curious to know if there are account transfers any time the city or county uses either entity. Both facilities appear to be constantly in deficit. I'm trying to better understand their usage and the agreements that govern each. Please let me know what you can about them.
Thank you!
Brad Green
Message from Jason Norris, City Recorder to Brad Green; dated June 24
Brad,
I am happy to provide financial information for you on any city operation. I would like to do it as efficiently as possible. For fiscal year 2015 the heritage center/festival hall brought in a combined $122,009 in user fee revenue and had an estimated $333,000 in operating expenditures. In other words for every $1 in revenue the public pays to use the facility I have to use $2 of the city's various tax funding to subsidize the operation. That's without debt service, capital expenses, administrative overhead, etc. I am reluctant to have staff spend time reconciling the P&L's for the facility by heritage and festival hall unless the information is helpful. The city is not a "property manager" in the context you are inquiring about. We have to run the facility and subsidize the loss. We encourage the city staff to use the facility when possible rather than rent other venues in town as I am already spending a substantial sum on the operation. It is assumed that facilities such as the Heritage Center provide an intangible value to the citizens of cedar city and facilitate commerce in the area.
Please let me know if you need the information detailed out further and I will have the heritage staff extract the facility calendar and reconcile the revenue.
Thanks,
Jason