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<br /> <br /> <br />To: Neal Beets, City Manager <br />From: Chris Miller, Finance Director <br />Date: August 16, 2004 <br />Re: Review of the Parks & Recreation Fund Deficit <br /> <br />Neal, <br /> <br />Per your request, I have compiled the following brief overview of the Parks & Recreation Fund <br />deficit. <br /> <br />Overview <br />The City's Parks & Recreation Fund has a current deficit of $1.2 million, which has necessitated <br />the use of an internal loan to provide for current operations. The deficit resulted from <br />accumulated operating deficits over several years, primarily related to the Skating Center's <br />operations, and specifically the Oval. <br /> <br />The Oval has been in existence since 1993, and despite numerous efforts to improve operating <br />efficiencies and find alternative funding sources, it remains unable to fully cover its operating <br />costs, nor has it been able to set aside any monies for capital replacements. Beginning in 2003, <br />City Staff revised their budgeting practices to more accurately reflect the Oval's operating <br />expenses and to more realistically project the contributions that are received from various civic <br />and athletic-based organizations. <br /> <br />In 2003, The Recreation Fund as a whole finished with an operating gain of $790. While this is <br />certainly a positive reflection on some of the actions noted above, the Oval itself will remain in a <br />fiscally challenged environment for the foreseeable future. Earlier, this year, the City committed <br />$70,000 in capital improvements to fix leaks in the Oval's refrigeration system. In addition, <br />given the Oval's relative age, a substantial investment in additional capital improvements can be <br />expected over the next five years. Due to the Oval's inability to recover its own operating costs, <br />this will necessitate the use of monies independent of those that can be generated by the Oval <br />itself. <br /> <br />Internal Loan <br />To cover the operating deficits noted above, an internal loan was, and is, provided by the Park <br />Infrastructure Maintenance Fund. This fund was created in 1998 for the purposes of providing <br />an on-going funding source for park maintenance, whereby the Fund's annual interest earnings <br />would be used to pay for a portion of the current year's maintenance efforts. However, <br />beginning in 2001 these funds were tapped to cover the operating deficit( s) of the Oval. <br /> <br />1 <br />