The Heartland Events Center at Fonner Park may be doing better
than founders expected back in 2004.

That’s the year that Mayor Jay Vavricek (during his first term)
and Brian Hamilton, serving as president of the Fonner Park
Exposition and Events Center Inc., signed an eight-page management
contract giving Fonner Park officials the right to run the center
and the city the right to eventually own it.

As was reported to the Grand Island City Council Jan. 31, the
events center has “cash flowed” and has even built up $1.3 million
in cash on hand. Of that cash, $300,000 is earmarked for ongoing
maintenance and the rest is operating reserve, said Marcy Luth, a
partner at Grand Island accounting firm Almquist, Maltzahn,
Galloway and Luth.

The numbers were shared as part of the “financial highlights”
she presented to the city council since the center’s inception.

She said the center had a peak of $10.2 million in cash in 2005
as donations had been received and construction began on the
7,500-seat center. Cash dipped to a low of $373,000 in 2007 just
after the center was built. Now that the center is operating, cash
has “been stable,” Luth said.

“For 2011, the audit is not finalized, but we’re projecting $1.3
million cash on hand at that point,” she said.

The management contract itself predicted that the center, which
was to “provide substantial social, cultural, recreational and
economic benefits to the citizens of the city,” would probably “at
best operate on a break-even basis.”

“Any net revenue from the operation of the project shall belong
to Heartland as its separate property and shall be used by
Heartland in manner consistent with Heartland’s corporate
purposes,” the contract stated.

To that end, 18 events were held at the center in its 2006
inaugural year, including hosting U.S. President George Bush, said
Hugh Miner Jr., the chief executive officer and executive vice
president of Fonner. Events were up to 79 in 2007 and 135 in
2011.

Of those 135 events last year, eight were family shows, 16 were
sports events, 13 were trade shows and 64 were meetings or
banquets.

Heartland has spent $980,000 to equip and furnish the center –
above and beyond the cost of construction, Luth said. The latest
improvement was a $70,000 upgrade to sound equipment, Miner
said.

He praised the multiple donors who made the center possible.
They include $1 million each from the Reynolds Foundation and St.
Francis Medical Center, $1.3 million from the Bosselman family and
$1.6 million from the Eihusen Foundation.

The city of Grand Island contributed $7.5 million through a bond
issued in 2004 that will be paid off in 2024. Hall County
contributed $1 million in a bond issued in 2006 that will be paid
off in 2021.

Luth detailed those bonds and then showed a graph of grants that
have come to the center before she outlined a $160,000 to $200,000
increase in net assets at the center each year.

Finally, she showed a PowerPoint presentation of operating
expenses, which total about $3.2 million a year.

City Administrator Mary Lou Brown said the center was being
reviewed this year because it’s supposed to be reviewed every
year.

“The management agreement that was entered into with Fonner Park
Exposition and Events Center, Inc. does call for an annual
accounting of all receipts and expenditures of the center,” she
told the city council.

The contract specifies that “at the request of the city, such
accounting shall include a balance sheet and a profit and loss
statement… provided, however, that the cost of such accounting
and audit shall be paid for by the city.”

Brown said the city implemented a 2 percent lodging tax in 2000
to fund the design, construction, maintenance and operation of the
Heartland Events Center. About $2.4 million of those tax receipts
have been collected in the past 11 years, she said.

“This is an asset worth $20.6 million in our accounting records
– so it is a significant asset here at the city,” she said.

Councilman Chuck Haase wondered what the center’s depreciated
value will be in 2024 when the city takes over.

“In 2024, I think that’s about a 25-year asset… it will be
down to about $5 million or so at that point after depreciation,”
Luth said. “That’s a real estimate.”

Besides managing the day-to-day operations at the center, Fonner
officials are to promote events there and work to attract trade
shows, conventions and the like.

Councilman Scott Dugan wondered what events the Heartland Events
Center offered free or reduced rent to in order to make good on its
charitable status to the community.

“Being a 501(c)3, there’s a lot more scrutiny now coming out at
the federal level about organizations calling themselves charitable
yet never doing anything charitable – always doing it for a profit
or at least to cover costs,” Dugan said. “I think it’s important
for the community to know what community uses potentially does the
facility have where there’s an opportunity to use it for little or
no cost.”

“There are a number of events that receive a reduction in rent,”
Miner said.

He listed a recent National Guard send off as such an event and
said he would provide the council a follow-up report on others.

Council President Peg Gilbert expressed concern about the city
having to assume $3.2 million in expenses when it takes over
ownership.

Luth said included in that $3.2 million is the cost of all the
events themselves.

“About half of that $3.2 million is direct event costs, and then
we’ve got the other revenue sources that are covering the rest of
the operation,” Luth said.

She said about $1.8 million comes in from ticket sales.

“Thank you,” Gilbert said. “This is an example of a management
contract that you can definitely do it better than what we could if
we were trying to do it ourselves.”