GRAND FORKS -- For the first time, Grand Forks' Alerus Center could be adopting a deficit budget.
The Events Center Commission agreed to a budget Wednesday that shows a $134,000 loss at the end of 2011. This includes the built-in subsidy of the 1/4-percent hospitality tax.
For commissioners, it was a largely philosophical issue because even though it has budgeted to break even or make a slight profit for many years, more often than not, the building has lost money.
In other words, as commission Chairman Randy Newman said of the budget, "It's probably more realistic."
Dwight Thompson, who's a member of the commission's budget committee, concurred: "It seemed like the most likely outcome when we were all working on it."
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By realistic, they meant two mid-range concerts with no major concerts on the scale of last year's Britney Spears performance. Concerts, if attendance is high enough, can make huge profits for arenas from concession sales and various other revenue items.
The concert industry has been routing around Grand Forks because of poor sales in several major concerts that the Alerus Center booked in 2008 and 2009, said Doug Kuhnel, senior vice president of VenuWorks, which manages the events center for the city.
The firm's goal is to rebuild the local concert market with up-and-coming stars willing to do mid-range shows, he said.
The Alerus Center budget approved Wednesday said revenue would total $4.1 million, including $390,000 in hospitality taxes, and expenses would total $4.2 million.
This is an approach that contradicts a recommendation by a task force formed late last year to reform the events center and improve its credibility.
"The commission should be strongly encouraged to stay within its budget and to use the 1/4-percent additional sales tax as a reserve fund in hope of creating a surplus," the task force said in its report, despite testimony from then events center Executive Director Steve Hyman that that would be unrealistic.
Several of the commissioners were actually on the task force, three of them being appointed to the commission because of their work on the task force. Yet, the commission voted unanimously to adopt the deficit budget.
Thompson, a former task force member, said he understood the task force's stance, but, going over the budget with VenuWorks, the budget committee felt it was better to recognize reality.
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Newman has long opposed deficit budgets because, as a banker, he said, he just doesn't like them. But he said he understood the budget committee's desire for realism. Break even would be great, he said, but "the only way to do that is forecast revenue."
The commission will always try to break even and get more events, he told the Herald, but there's no way to know what will happen. "I used to teach finances at UND. My great word on budgets used to be 'That won't happen.'"
The bottom line will always be better or worse than what's budgeted, he said.
The Alerus Center budget will next go to the City Council for its final approval as part of the full city budget.
Tu-Uyen Tran is a reporter at the Grand Forks (N.D.) Herald, which is owned by
Forum Communications Co.
