Sparks flew at the most recent Idaho Falls Auditorium District (IFAD) meeting, held late last month.
IFAD executive director Chip Scott called board member Bob Nitschke to the carpet. “We need to come together,” Scott said after Nitscke questioned whether expecting the IFAD Event Center to operate at a loss for a time would be feasible, given IFAD didn’t yet have capital to break ground.
“This board is not unified in any way. Specifically Bob, I’m going to call you out on this. I believe you do not have any intention of supporting this project from now going forward. I feel like the CSL (Convention Sports & Leisure International of Minneapolis) report could have been 100 percent on point, and the final report could be absolutely perfect, and you would still find fault and disagreement. I’m really disappointed in this.”
The public flare hearkens back to the huge amount of turnover IFAD has experienced in the past 15 months.
For starters, a May 2017 election saw all but one board member replaced. Current board chairwoman Terry Gazdik was the lone holdover after previous board members allowed their terms to expire without seeking re-election or resigned.
All of this is not to say the current board is speeding toward derailment. On the contrary, there are finally several things working in IFAD’s favor, despite a turbulent year.
For starters, executive director Chip Scott brings to the table decades of experience working on events facilities and orchestrating large-scale and unique events for entities from the U.S. Army to larger cities, with the kinds of budgets that would make any community organizer’s tongue wag.
When Scott gets a feasibility study presentation that says IFAD has the right-sized venue, a prime location geographically situated to capture some extremely high-quality acts on their way through town, of course he’s barely going to be able to contain his elation that his project is on the right track.
Scott said he’s not the only one. After the feasibility study presentation concluded, he started receiving phone calls from local supporters of the project – hoteliers, financial institutions exploring opportunities to invest and organizations chomping at the bit to book conventions once the center is built.
The main sticking point, as always, is that some (publicly elected) board members are (rightly) nervous about cash flow.
With the information publicly available — namely the fact that the district’s bed tax brings in around $2 million a year, that it has about $10 million saved, but that the Events Center will cost around $54 million to build — it’s simply very difficult to make the math work.
Scott, in the past, has answered these concerns with loads of optimism, willpower and focus that may be akin to a kind of faith in meeting a need for the public’s good.
He believes a lease-back agreement arrangement is IFAD’s best bet. Lease-back agreements are a funding formula created in Idaho by the Boise Auditorium District where an entity pays for construction up front and the district leases back the building over a long-term arrangement of payments and perks for the investor.
At the most recent meeting, Scott named Key Bank, Wells Fargo and Raymond James Financial as three financial institutions that had contacted the Auditorium District out of the blue after the feasibility study presentation concluded. “I do think it is encouraging that these institutions are interested, and actually came to us first. I take that as a very positive sign,” Scott said.
Even so, there are still a lot of what-ifs, which Nitschke and board member Jill Kirkham are typically the lone board members to voice on the public record.
Centennial Management Group, the operator of the Idaho Falls Chukars baseball franchise, are certain that as operators of the Events Center they could save the Auditorium District hundreds of thousands, if not millions of dollars off the negative balance reflected in the first years of operation in the feasibility study. Centennial and IFAD signed a Memorandum of Understanding (MOU) about operations at the Events Center back in 2012, when the public was being told the groundbreaking could take place as soon as May 2013.
At a July 18 board meeting, Gazdik also pointed out that, while the study showed that the Events Center would begin operating at a loss, she wasn’t worried since a clause in the MOU says Centennial would cover any deficit.
Scott said that the naming rights and the specifics of the Centennial contract are the next big decisions for the board. CSL, the firm that did the feasibility study, said the relationship with Centennial Management and their willingness to take on a lot of risk was unique to the Idaho Falls Events Center.
But until the MOU becomes an ironclad contract, there is still a lot of risk involved for the Auditorium District. How would IFAD manage to cover razor-thin profit margins, if any, if Centennial were to walk away?
Scott pointed out these holes are the entire point of the feasibility study – to take those what-ifs, wrangle them into a manageable arena, and begin to quantify them. “(We need) five more hotels in the city,” he said as an example, two of which are being built already. “We probably would be great in terms of what room taxes would bring in annually. The growth that (the Events Center) brings will be able to sustain costs of operation. Some people have the ability to allow their mind to go in that direction. The quality of life goes up and there’s a positive impact.”
That, of course, is the exact reason the public approved the Auditorium District in the first place. The feasibility study shows an expected $10 million in direct spending in the community annually for the first five years of its operation, $70 million in the next 10 years, then more than $200 million by 30 years of operation.
Scott’s public thrashing of Nitschke shows tensions are high. What Scott seems to have temporarily lost sight of at that contentious board meeting is that we live in a highly conservative community and state laws create a precarious — to the point of being nearly impossible — path to funding big projects. In fact, if the Auditorium District were to decide to run a supermajority bond initiative to raise the funds to get the Events Center moving, they might as well throw the money they already have on hand into the Snake River.
The viability of this project hinges not just on money, but on finely-honed communications with the public, including the board itself. It’s not a board member’s job to “get on the same page” as the executive director until all of his or her questions are answered, even if they seem to go on forever. If this back-and-forth is treated as a war of words in public rather than as a healthy, and yes sometimes tedious, dialogue we’ll end up right back where we started.
No one wants that.
It’s a publicly elected board member’s job to hold the executive director accountable to his promises to the community about how much debt they can, in good conscience, take on. As long as those board members are acting in good faith, as Nitschke and Kirkham most assuredly are, their doubts should be met with informed reassurances backed by quality research.
Some tensions and public frustration about working through the critical junctures of a near decade-long dream project should be expected as part of the hard work of doing the nearly impossible — Nitscke used the word “Herculean” — but only as long as those exchanges bear fruit.