Town manager freezes municipal spending as first step

Tue, 04/26/2016 - 18:38

Lynda Clancy

CAMDEN — The Select Board in Camden agreed April 26 to help the Snow Bowl resolve its $297,000 deficit by endorsing the town manager’s move to freeze municipal nondiscretionary spending, and then possibly ask citizens at annual town meeting to tap the town’s rainy day fund.

Because the board in a workshop, no votes were taken. The Select Board anticipates formally addressing the Snow Bowl deficit when it convenes next Tuesday for a regularly scheduled meeting.

The workshop took place in the Washington Street Meeting Room with Camden Snow Bowl Manager Landon Fake, Town Manager Patricia Finnigan, Snow Bowl staff and a roomful of interested citizens.

While there were plenty of probing questions about the budget and how the deficit evolved, there was equally strong support for the outdoor facility that engages the broader region, and beyond.

Fake produced numbers that explained where much of the spending, and revenue shortfall, occurred. He said the deficit for the 2015-2016 season stood at $216,303, although some checks remained outstanding. The deficit for the previous season, 2014-2015, was $82,633. Together, the Snow Bowl hovers in the red at approximately $297,000.

In response, Town Manager Finnigan has put a freeze on all municipal expenditures, and will determine in what other department budgets there might be money to offset the Snow Bowl deficit.

“We are putting a freeze on this year’s budget,” said Select Board Chairman John French, at the outset of the workshop. “We will recover what we can from the budget.”

Then, if more is needed, the town will look at taking money from the town’s undesignated fund balance, which currently sits at $2.5 million. That will require town approval, which could be requested at annual town meeting in June.

“That is the town’s rainy day account,” said Finnigan. “I think that’s an appropriate title to what we are dealing with right now.”

At the workshop, the board also discussed creating a new ad hoc committee to help oversee Snow Bowl financials. Currently, the town’s Parks and Recreation Committee helps oversee Snow Bowl operations, but the Select Board indicated that the ski area deserves a heavier fiscal focus while the deficit gets paid, and the Ragged Mountain redevelopment concludes.

At the workshop, the board and citizens endorsed combining the two-year deficit and eliminate it all at once so that the Snow Bowl can start next season with zero debt.

“I’d like to see a clean start going into next season,” said Camden Select Board member Don White.

Why the shortfall?

Fake attributed the $216,303 deficit to the warmest winter on record, and the resulting short ski season. The municipally-owned Camden Snow Bowl was open for but 42 days in 2015-2016, and was plagued constantly by a lack of snow and mild temperatures.

Fake said the ideal temperature to make snow is a consistent 25-28 degrees F.

Camden Snow Bowl Operation Days

2008: 82

2009: 68

2010: 62

2011: 71

2012: 68

2013: 70

2014: 67

2015: 58

2016: 42

“We didn’t start making snow until Dec. 16, and it took until Jan. 1 to open the lowest part of the mountain,” he said.

“We had to lease compressors to run the snow guns for 2.5 months,” Fake wrote, in his summary. “We had budgeted for two months. We made snow for 549 hours. The average number of hours in the past was 400 hours. In 2015, we made snow for 329 hours (we received 121.5 inches of snow that year.)”

He added that the Snow Bowl’s new snow guns use less compressed air, and therefore less electricity. But, there is 50 percent more terrain and trails to cover, given the redevelopment expansion.

Another big factor, he said, is the “backyard effect.” If skiers don’t have snow in their own backyards, they are not apt to go skiing, he said.

According to Snow Bowl records, the 2016 season was the shortest of the past nine years (see sidebar).

As the workshop conversation continued, questions were raised about overall budgetary increases.

Camden resident, Budget Committee member and Snow Bowl season pass holder T.C. Bland asked how they operating expenses increased from $500,000 to $600,000 to $700,000 over the past eight years.

“This year, we are pushing $900,000,” he said. “The explosion of expenses seems to be the issue. The redevelopment was supposed to be about creating efficiencies.”

The summary produced by Fake at the workshop indicated that total operating expenses increased from $515,933 in 2008 to $916,837 in 2016. Within those years, the number of employees increased from 72 to 99, and of those, 91now are seasonal employees.

The payroll mirrored that increase: In 2008, it was $268,250; in 2014, it was $350,000; in 2016, it was $394,199.

But the bigger picture factors in the 2014-2016 mountain overhaul which included installing a new lift, expanding trails, reconfiguring terrain, rebuilding the parking lot and improving the sewer system. The Ragged Mountain redevelopment project itself went over-budget by $2 million, from $6.5 million to $8.5 million, and combined with a paucity of snow, the entire Snow Bowl has hit obstacles not figured into the budget.

And, according to Fake, now that the ski facility is approximately larger than it was eight years ago, its budget is likewise bigger.

“We are about 40 percent larger,” he said. “It is more to make snow, groom and run lifts. Our terrain is literally 40 percent more than it was 4 years ago.”

The weather also affected season pass sales.

According to Fake, season pass revenues were 93 percent of what was budgeted, at $225,135 versus $243,000.

However, season pass sales during the early sale period exceeded budget. The mountain sold 1,267 passes, a record for the facility. But by the time January rolled around, when late purchasers are apt to buy their season passes, the weather was warm and discouraged more sales.

Ticket sales were likewise down, totaling $163,539 versus the budgeted $303,000.

Revenue lags expenses

The snow pack, at just 22 inches of natural snow this past winter (as opposed to 102 inches in 2008, and 121.5 in 2015) and the warm temperatures resulted in poor ski conditions through most of the season.

The Snow Bowl could not keep up with both creating conditions for passholders, and ski programs. Whenever snow was made, it was apt to turn to water.

The mountain remained closed during Christmas week, which the Snow Bowl banks heavily on for kicking off the season, and which normally produces 15-20 percent of revenues.

There were a few bright spots: Prior to President’s Day weekend, it snowed and the Snow Bowl made $23,700 in ticket sales. On the Martin Luther King Day holiday there was also snow, and ticket sales that weekend totaled $20,000.

Those two weekends accounted for 24 percent of the total day ticket revenue for the season.

Overall, however, revenues failed to match projections: ski lesson income was 57 percent of what was budgeted. Day ticket sales were at 44 percent of what was budgeted; equipment rental at 43 percent.

Fake emphasized that the Snow Bowl has an obligation to create conditions for the passholders and program participants.

Even in god years, the mountain loses money by staying open in March, he said.

“But we stay open because we have sold $250,000 worth of passes and $60,000 in program charges,” he said.

“The race program was one of few things that happened on budget,” he said. “It brought in a little bit more revenue that we budgeted for. Races are great because they are not as weather dependent. They are all prepays.”

The Toboggan Nationals, as well, produced some income in 2016, albeit 10 percent of what was budgeted ($16,470 versus the budgeted $90,000)

Again, however, due to warm temperatures the two-day event was reduced to one day.

Budget projections were too optimistic, said Fake.

“But all of those lines were based on history and as much logic as I could bring to it,” he said. “I think all of them would stand up to logic.”

Finnigan said the 2017 Snow Bowl budget is to be completed by July. The fiscal year for the Snow Bowl runs July 1 to June 30. She said the Snow Bowl staff is working on budget scenarios, including a worst-case scenario.

Fake concluded by saying: “It’s a difficult position to be in to be in front of you with this huge loss. We worked really hard to pull off good skiing for our customers. We also recognize we have large responsibility to taxpayers.”

Moving forward

While there were critical questions about the Snow Bowl deficit, and the budget, there was support from everyone in the room. Many were skiers, and if they weren’t, they recognized the economic value of the Ragged Mountain Recreation Area.

The Snow Bowl represents primarily the winter portion of the larger 100-plus-acre town-owned recreational area that comprises a lodge, athletic field, Hosmer Pond shoreline, and hiking and biking trails. All of this is adjacent to Coastal Mountains Land Trust acreage that straddles Ragged Mountain to Mirror Lake in Rockport. The area is laced with trails that are used year-round.

In 2013, a Redevelopment Committee produced a report that outlined how the Snow Bowl, and the larger Ragged Mountain, could be developed into a four-season facility that would enhance Camden’s position in the outdoor economy. Camden voters had endorsed that idea several years earlier by bonding $2 million of what was to be a $6.5 million redevelopment project.

Camden resident Peter van Allstine urged the Select Board at the April 26 workshop to further develop the facility as a four-season destination. He was chairman of the Parks and Recreation Committee in the 1980s.

“This isn’t a new problem if you go back in history,” he said. “Think about a serious revenue producing summer program. Get 100 good days, 100 cars a day from out of Knox County, and figure $100 per car on being spent on some activity. That’s a $1 million in activities. Chairlift rides are not going to cut it.... If my 100-cube formula is accurate, there is some serious revenue to be made. Give serious consideration to it.”

Camden realtor Nancy Hughes said at the April 26 workshop that she does not ski, nor is at Ragged Mountain often.

“But I sponsored a chair at the Snow Bowl,” she said, adding that the facility earns a strong market return. “It’s a big draw for the community. The town profits from visitors coming here to use the Snow Bowl. The gain is so great against the loss, we just can’t let it go based on specific numbers on these sheets.”

Board chairman John French polled the room whether the town should attempt to remedy both the $216,303 deficit, as well as the $81,000 deficit from 2014-2015.

Camden resident Geoff Scott said yes, but added the caveat that the Snow Bowl should eventually pay that deficit back to the town’s general fund.

Camden resident Allyson McKellar agreed, and said the Snow Bowl surplus should return to Camden taxpayers.

She said the message should be: “We are not here to pick up the tab on losses.”

Snow Bowl Project

The Snow Bowl’s upgrade, which officially got underway in March 2014, included new trail construction, new lift installation, sewer and parking lot work, and the anticipated construction of a new lodge. The $6.5 million project grew in expense to $8.4 million in 2015.

Most of the funding has been raised through private donations; but Camden citizens, who own the Snow Bowl, also agreed to issue a $2 million bond.

Approximately $5.5 million was expected to be spent on the project through 2015, while the nonprofit Ragged Mountain Foundation continued to raise money to pay for a new $2 million lodge.

The Foundation is halfway toward meeting that mark, said Snow Bowl Manager Landon Fake, in mid-April 2016.

In 2008, Camden voters approved a non-binding measure that positioned support for borrowing up to $2 million for Ragged Mountain Recreation Area improvements, if matched by a minimum of $4.5 million raised via private money.

Following that vote, project proponents commenced soliciting contributions, as well as holding public fundraisers.

Voters approved in 2014 to go ahead with the $2 million expenditure for the mountain.

The cost of borrowing $2 million to the taxpayers could average $110,000 in annual interest payments for 30 years.

The intent is to “provide the capacity to accommodate up to 600 skiers per day with adequate parking, lodge space, uphill lift capacity, and ski terrain serviced by snowmaking and enhance year-round trail use for hikers and mountain biking,” according to the plan.

The mountain has been supported by the town in varying degrees since the town assumed ownership of its real estate and operations in 1983.

In 1990-91, Camden voters approved funding the Snow Bowl with $149,000 of their tax dollars; in 2009-2010, it was $55,000. In 2012, and following several years of good snowfall, the town contributed zero dollars.

The Redevelopment Committee, a municipally appointed group of citizens, has built a detailed finance and budget analysis of the Ragged Mountain Recreation Area through 2016, incorporating the entire mountain upgrade.

Aside from debt obligation, the projected budgets in 2015 included no town matching funds in 2015 and 2016.

Instead, the budget anticipated additional revenue would derive from the increased numbers of daily and season ski tickets, ski school enrollment and new lodge rentals.

– Lynda Clancy

Board member Don White said the Snow Bowl has yet to have a complete normal season operating under its redevelopment parameters.

“That is a golden gem out there, that Snow Bowl,” he said. “But we have to do more with summer program. Bake sales aren’t going to do it anymore. We need to do something with mountain biking. We have to come up with some super solid programs for all months of the year. We have to find something to make money every single month.”

McKellar suggested that redevelopment funds be used to address the deficit. The redevelopment project includes building a new lodge, a $2 million expenditure, of which $1 million has been raised by the nonprofit Ragged Mountain Recreation Area Foundation.

“The foundation gave us $15,000 this year to pay for capital equipment,” said Fake. It also has an endowment for the Snow Bowl, he said, but it can’t used pledged donations intended for capital improvements to be used to cover operational costs.

The discussion about the Snow Bowl ended with several citizens signing up to be on the ad hoc advisory committee.

Sales, revenue up for season ski passes up at Camden Snow Bowl

Camden readies Snow Bowl for new season; ticket, season pass price increases included (July 20, 2015)

Camden approves Ledgewood contract for phase 2 of mountain work (May 20, 2015)

With record snowfall, Camden's Ragged Mountain Recreation Area begins making financial headway

Camden Snow Bowl Redevelopment Committee, Ragged Mountain Foundation hold community meeting (posted March 2, 2015)

• Camden Snow Bowl project up to $8.4 million, fundraising resumes (Feb. 3, 2015)

Making tracks in some dreamy snow at Camden Snow Bowl (Jan. 30)

Snow Bowl to fire up chairlifts; refunds offered to passholders (Jan 21)

Camden Planning Board to begin Snow Bowl lodge review (Jan. 9)

Camden Select Board brings in old friend to help with Snow Bowl progress (Jan. 7)

• Camden Snow Bowl to start making snow Jan. 5 (Jan. 2)