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HomeMy WebLinkAbout2002-09-23 KCVB MinutesKENAI CVB BOARD MEETING MINUTES September 23, 2002 Board Members Present: Fred Braun, Ron Malston, Robin West, Jim Bookey, Robert Fulton, Marion Nelson, Dan Van Zee Staff Members Present: Ricky Gease, Diana McKenney A. Call to order: The meeting was called to order 5:40 p.m. by President Fred Braun. As there was not a quorum immediately present, the Board proceeded with notes and presentation: Mr. Gease presented a note from friends of Alaska State Museum encouraging legislators to support the arts and museums. Mr. Gease was accepted for the Foraker Certificate in Nonprofit Management and will be attending October 8 and 9. Mr. Gease presented the results of the poll that was taken by KPTMC in conjunction with Kenai CVB and the Soldotna Chamber. Standard business reply to the survey: Most businesses were lodging and charter businesses from the Central Peninsula; Of the 57 respondents, 27 experienced a decrease in business with 14 having an 11 -25% decrease 28 had increases with 8 having a 26 -50% increase; Most are optimistic for 2003 and will maintain current marketing strategies. Mr. Braun had correspondence from. the U.S. Fish and Wildlife Service. They had nothing but compliments on our building. Upon tracking some follow up with people she works with, they had the highest remarks for this building. Ms. Nelson gave a presentation on the Milepost and made copies available to those present. The `Plan -a -Trip' map will be different next year and not sponsored by Tesoro. The Kenai Peninsula Borough approved payment for sponsoring the map, which will feature the Kenai Peninsula as the playground of Alaska. KPTMC acted as the pass- through for the payment of this by providing access to their graphics and photo images. The map will have a map of the Kenai Peninsula Borough as well as the additional image panel. We hope to have this available every year. B. Agenda: Mr. Malston moved, Mr. Fulton seconded to approve agenda. Approved unanimously. C. Approval of August 12, 2002 Minutes: Mr. Malston moved and Ms. Nelson seconded to approve the minutes. Approved unanimously. D. Persons to be Heard Moved done before meeting was called to order E. New Business 1. Kenai CVB Departmental Budgeting. Mr. Gease referred to the financial reports in the packet. We are $8000 ahead of the budget. There are some changes in the financial statements to reflect a different breakdown in the income statements breaking out KCCV into Museum Services and Visitor Services to better track revenue sources and actual expenses. In teuus of Gaming, we have some visual information for bingo and pull -tabs showing we are above our budgeted income. Mr. Braun has requested a comparison to 2001. Mr. Gease indicated that 2001 was a record year probably because of the CIRI checks. Mr. Braun indicated that he really preferred the graphs. 2. Gaming proposal for new pull -tab location. The Executive Board met on Monday, September 16 The emphasis was on the need to gain access to more revenue. Mr. Gease has been charged with this task to help offset the challenges including a strained city budget. Mr. Gease discussed breaking out KCVB and KVCC, and then dividing KVCC into Museum and Visitor Services. At present, gaming money is spread out over all three. The goal is to concentrate on a gaming revenue for KCVB via a `Friends of the VCC' 501(c).3 structure. This would provide 2 separate income streams that could be more dedicated. Currently, a good amount of the income goes to Museum Services, which leaves destination marketing with a $12,000 budget. We'd like to bring in a comparable stream to underwrite museum and visitor services. Down the line, we hope to get an accreditation for the museum and then have access to larger grants. Mr. Bookie felt that we couldn't get this building accredited, but Mr. Gease pointed out that we already have a museum and that regardless of how or when that takes place, we will still need to provide those services and pay for a curator and ensure professional care of items donated and collected. Long- terirr strategies include grants from the larger foundations and the federal government. And while there is a 3 year limitation on using a 501(c).3 for gaming, it is immediately available for grants. The bed tax goal is also still a part of the strategic plan. Mr. West asked about a separate board requirement. Mr. Fulton clarified that we would have a separate entity from this one. As of today, we have been asked by the Oilers to join them in an MBP to continue the current bingo /pull -tab scenario at a 60/40 split. This scenario will best maintain current flow. We would be able to keep Peggy in her current position, which would not be the case if we maintained our self directed permit separate from the Oilers. Since Peggy has been established as the `Manager' for the Oiler's permit and a Cashier for us, the state would continue to consider her a Manager. This makes her ineligible to work for 2 different permits. The Oilers had 3 choices: 1) Enter into an MBP with us; 2) Enter into an MBP with their Booster club and/or others; 3) Do a permit alone. Option 1 offers the most benefits to them because: 1) It allows Peggy to keep her current position; 2) Maintains the continuity established i.e. 5 nights of bingo per week in one location; 3) Prevents them from reaching the maximum limit of their pennit before the end of the year; 4) Provides them the opportunity to extend the number of allowed nights of operation to cover 5 nights a week, and 5) Allows their Booster Club to keep their permit. Mr. Braun indicated that we are happy with Peggy's involvement and with the current scenario. Benefits to us are: 1) Our net result should remain the same; 2) We will still have the option to have Peggy run our nights; 3) Substantial reduction of gaming bookkeeping requirements; 4) Approximately 1/3 of the value of a permit to use in the new pull -tab parlor in the event that permit reaches maximum pay -out Mr. Braun pointed out that we are looking to raise $80,000 $120,000 in additional revenues. Whether it is raised by bingo, pull -tabs, or fundraisers, this is where we need to be. Questions to Mr. Gease: Mr. Bookie: Will moving into the pull -tab deal cause a rift with the Oilers? No, we had talked about including both in the MBP, but they decided to avoid the risk of joining that way. Mr. Fulton: Is anyone interested in the 501(c).3? Yes, Kenai River Council on the Arts. Mr. Fulton: Is there a projection on difference of income on the two? The Oilers almost max out. Peggy fine tunes the fuel that goes through the pull tab parlor by making available less desirable pull tabs in order to prevent reaching the maximum payout. Mr. Fulton: What is your recommendation? We should go forward with it. Peggy has been a good employee and maintaining continuity is most important for bingo players. Mr. West: Is there any prediction on how it will affect the new site? People who go to bingo play pull -tabs, so the current income source should not be affected. Mr. Braun: What about saturation? Mr. Malston replied that it is a possibility. Mr. Braun: There is no guarantee that population growth will guarantee pull -tab income. The state data shows that gaming continues to grow. Mr. Bookie: What about changes in the state like smaller PFD's and other economic challenges we are definitely looking at budget issues in the city. That is why this 2 -3 year window is important to help us get to other income sources. Mr. Fulton: If we continue, will we be able to split our money to museum? Yes we can, we are just trying to set up long teem strategy and show where income and expenses go. Everybody else does bed tax. When we look at our financials now, it is just general. So as we break out, we can compare ourselves to museums and visitor centers around the country. Mr. Fulton: Will we still pursue 501(c).3 for friends for another permit? We have 2 questions are we going to open a pull -tab parlor, and are we going to get a 501(c).3? If we do the pull tab parlor, this is the best location in town. Refer to the pull -tab parlor budget. Our break -even point is $250,000 in pay outs. Comparing to other locations, they max out in 10 -11 months. If we go into a new parlor, we would have to do REALLY BAD to lose money. If we max out, our income stream would be approximately $217,000. Mr. Bookie: Is Mr. Norville willing to negotiate on the 5 year lease? He is set on 5 years, but we can sub -lease and we don't have to share our profits. We will be between a hair salon and a pizza parlor and won't be charged rent until December. Mr. Braun: When you look around town, I agree with Ricky. My first thought was that it was a lot of money, and not a good price for storage. I don't know who would be a good other tenant, but we only need 500 sq feet. Should we have another tenant, or another board meeting room? Again, we'd have to be really bad to not make money. Gaming revenue will more than make up for the high cost. The additional $10,000 we'd bring in for rent is not going to be the factor that determines our success or failure. Mr. Van Zee recommended a tobacco shop and Ms. Nelson a dip ice cream parlor. Mr. Bookie: How far can the 501(c).3 go into the private sector? The 501(c).3 wouldn't run the for profit business, we would sub -lease to the for profit. Ms. Nelson: Does the city have a problem with this? Mr. Bookie said he can't see any. The only problem is that we were written out as a museum in the original grant. He indicated that we couldn't be a museum unless we wanted to pay back the $900,000 grant so we had to be very cautious on how we set this up and what we call it. Mr. Bookie: Remembers a discussion 4 or 5 years ago about another 501(c)3 that the board decided against it but can't remember the pitfalls. The recommended 501(c).3 was going to run the Cultural Center and was not to be used as a fund raiser. Kathy Tarr didn't like to have any other parallel structures operating the facility. But if we set up a friends group that is strictly used for fund raising, there is not an issue with governance over who runs the collection. Working with Dana and Jay, we would have a committee who works on what goes into the collection. Grant opportunities would be immediately available with this 501(c).3, but not gaming. Marian moves that we continue our relationship with the Oilers to join in an. MBP by Jan 1 with a 60/40 split and that we instruct our Executive Director to move in that direction. Mr. Van Zee seconded. The motion carried unanimously. Pull -tab parlor Mr Braun reviewed the lease from Mr. Norville. This lease is so close to the Carrs lease allowing us a month and a half for the building of the interior at our cost 1200 sq feet and utilities. He has questions about a lobby area, signage assuming signs would be at our cost, hours of operation (10 -6 Monday Saturday are listed) Questions for Mr. Gease: Mr. West: How soon before we see revenue? The earliest we could be up and running is November 1, the latest is December 1. With this scenario we have until about mid March to find another person to go in with. Sheet rock will be up and we will have to paint it Ricky volunteers his labor for this and we put down industrial carpet. Mr. Bookie: What about the worse case scenario can you carry it for 6 months? Yes, we have reserves to carry it for 6 months. If we are not making any money in June, we would have to sub lease. Mr. Bookie: Norville is one man who doesn't bend and so a 5 -year lease is tough. Who signs the lease the Executive Director and President? Just wants to make sure that board doesn't get tied into anything individually with Mr. Norville Will any of the board members be held liable? Mr. Braun said the lease comes back to board. Ms. Nelson: Can't see how we can lose. She is not wild about gaming, but we need the second stream of income. Wants to make sure that working with Kenai River Council on the Arts is OK too. We just have to continually watch all these relationships and be aware of all ramifications with all these entities. Mr. West: Is it true that until we get the second that we can only make the $350,000 until we get the second permit? We would get another $30,000. Mr. Gease spoke with Mark Gregory who had a brainstorm about getting more people into bingo. He recommended that we use bingo as a fundraiser that we offer to others have them get 50 people to bingo and split the proceeds with them. He will check on the legality of this option. It would be nice if we had a year with the MBP and time to set up, but the most important thing is location and with this new building being available, the time is now. Mr. West: In developing friends, we developed one for the refuge a few years ago, it's hard to keep a board going. Depending on the requirements and some of the legal requirements, it may not be as easy until we know what the board has to look like etc. Mr. Bookie: This was part of the reason we didn't go forward is because we didn't know how to structure. Ms Nelson: This is a different focus it is dealing with the money. It seems that if we had a minimum size board with one of us on it, the focus is fairly narrow. Mr. Gease: One of the qualifications for grants is who contributes to you're your museum— do you have community support? So to apply for grants, we have to have friends group.. Mr. Braun: Would like to go over the lease with Ricky and review several things: 1) Lease term 3 years instead of 5; 2) Define commons area and pro -rated shares of those expenses; 3) Signage cost and windows limitations; 4) Sub -lease limitations; 5) Pro -rated tax assessments; 6) Advertising can we promote what we are; 7) Hours of operation is 10 -6 Mon -Sat a minimum and 8) What about profits for a for profit business we sub -lease to. Lets get something on the table from the board. We need to look at some other source of revenue and this is at the top of the list. We aren't going to go out and do a fundraiser and we are out of time and resources. Ricky has done his job and brought to us a recommendation. I don't know what other options are available. Mr. Malston moved to have Mr. Gease and Mr. Braun proceed with negotiations for a lease for the pull -tab parlor. Ms. Nelson seconded and it carried unanimously. F. OLD BUSINESS 1. Arctic Winter Games Update Artic Winter Games Cultural Committee Ricky is on committee. Ricky and Jay worked on their portion and with mark Gregory for operating budget. Not included were capitol projects for the games. CIRI is looking at 80 acres across from Russian river and they want to build a hotel with cultural center there said Mr. Fulton Mr. West said there are negotiations with the Department of Forestry and CIRI to develop a cultural research center. If legislation is signed into law, we could see it in next year's budget. The project would cost millions of dollars. If it started next year, it would take 3 to5 years to complete. Mr. Gease said that the borough is looking to develop a ski resort in Cooper Landing too. Ms. Nelson asked that we please keep a finger on reality as you progress through this process. 2. Bed Tax investigation committee: There has been no meeting since June waiting for election to see who will be on the assembly and who the Mayor will be. They are trying to keep this from being an issue. Wrote to Jack Brown about issues we would like to bring up in terms for a bed tax situation where does the money go, who collects it, is it general fund, etc. The next meeting is October 4` G. Executive Directors Report: Museum's Alaska Conference. It was Jay and Dana's first good educational opportunity and good contacts. Also invited Paul Gray to go up and get exposure for the videos he has done with us and will probably get some work from that. Had a good breakfast with other chambers on how to market exhibits. H. Board Comments: Mr. Van Zee, Ms. Nelson, and Mr. Malston had no comments. Mr. West: The National Wildlife Refuge System will be celebrating its 100 anniversary. He had commemoration pins for the board. The Refuge system began March 14, 1903 with Pelican Island under Theodore Roosevelt. There are 530 refuges, with at least one in each state and 16 in Alaska. Local activities include a play on October 11 a time capsule to be buried in March to be opened in a hundred years, and ESPN's Outdoor Channel programs featuring Alaska. Mr. Fulton: We need to consider re- wording ourselves from museum to storage place for our cultural artifacts or something to remain in compliance with the original grant. Mr. Bookey: City budget starts in October. Hopes it doesn't impact us here. Believes we are headed in the right direction by considering long -tent funding, because there will be an impact at some time. Depending on proposition on grocery tax, if that passes, then all bets are off and there could be significant impact across the board. Business sector can't afford anything right now, so hopefully Since board is headed in a different direction, he will talk to city attorney to determine if there is any impact on the board concerning the 5 -year lease for the pull -tab parlor. Wants to make sure that there is no legal liability to come back to the board or the signers of the lease. Will try to get an opinion from the attorney and back to Mr. Braun by next week. Mr. Braun Was reluctant to agree to pull -tab parlor at first mostly because of potential negative public perception and the impact that would have on our hard -earned reputation. After the Executive Board meeting held the previous Monday, however, believes that this is the best idea available to raise the funding necessary to move forward with the long -term financial goals. Fundraisers have proven to be ineffective and he is not willing to participate in or subject others to those types of activities. I. Next Board Meeting: Special Board meeting October 7 to address the pull -tab parlor issue and then not again until after Thanksgiving. Mr. Gease would like directions at the October board meeting for November meeting. J. Adjournment: Meeting adjourned 7:18 p.m. Respectfully Submitted Diana McKenney