June
25, 2014
Oroville
Mercury-Register
By
Barbara Arrigoni
OROVILLE >> Despite noting positive improvements through a new general
manager and other endeavors, the 2013-14 Butte County Grand Jury took the
Feather River Recreation and Park District to task on two key points: failure
to adopt a long-term financial plan, which previous Grand Juries recommended,
and the district's "massive debt load" prompted by the purchase of
the Activity Center.
The Grand Jury Report was
released online late Wednesday afternoon, though it was reportedly not
scheduled to be released until Friday.
The 11-page FRRPD report begins
with a summary and the statement, "Poor management and unsound fiscal
practices caused the serious problems facing the Feather River Recreation and
Park District."
In its investigation, the jury
reviewed previous Grand Jury reports and FRRPD's responses for 2005-06, 2006-07
and 2011-12; looked at past and current board agendas and meeting minutes;
interviewed the current board of directors, administrators and supervisors;
attended meetings; analyzed financial data; and reviewed the 2012-13 Matson and
Isom audit report dated Feb. 7, 2014. Jurors also checked other sources,
according to the report.
Although the Grand Jury
affirmed that the new general manager has set the district "on a better
path," the panel states her accomplishments are "overshadowed"
by FRRPD's $4 million debt.
In the report, the Grand Jury
states the total debt service payment required for the fiscal year ending June
30 is nearly $600,000. (The district's proposed 2014-15 budget shows FRRPD's
yearly loan debts at more than $623,000). In June 2015, monthly payments for
the Activity Center will increase from $23,262 per month to $42,586.
"If no corrective action
is taken, in two years the annual debt service will jump to $825,000, a 40
percent increase," the report states.
Citing the recent audit, the
Grand Jury noted that unless the district can generate additional revenue and
renegotiate its debt, its "prospects for survival are doubtful."
According to the report, in
2011-12, that Grand Jury panel recommended the board adopt a financial plan,
but the FRRPD board has failed to do so.
The current panel focused on
determining if the past "shortfalls," particularly the financial
problems identified in previous reports, had been corrected.
Besides finances, the Grand
Jury found that most of the parks are in poor shape, and buildings, facilities
and equipment are aging.
It also found that vandalism is
a problem throughout the district that is serious and costly.
Another point the Grand Jury
made was that two current directors have served since fiscal year 2005-06 and
there are no limits on the number of terms a director may serve. The panel
recommended the board consider adopting term limits and rotating participation
on committees.
There were positive findings,
such as improvement in record-keeping, a well-designed, current Web page and
professionalism in the workplace.
"Under the General
Manager, the District's operations have greatly improved," the report
states. "However, the General Manager (and the Board) would benefit from
the expertise of a qualified financial professional who could provide direction
in long-term financial planning."
The Grand Jury was also
critical of the purchase of the Oroville Gymnastics Sports Academy, now the
FRRPD Activity Center.
"The purchase of the
Activity Center, and, with it, the gymnastics and childcare programs, was
ill-advised and unsupported by a realistic projection of income
potential," the report states. "There was no performance review of
the operation to determine if it was financially sustainable."
The district board has been
attempting to restructure the debt on the Activity Center, but as the Grand
Jury noted, there is a legal requirement to repay the debt within 10 years that
complicates the process. The jury suggested "enlisting someone
knowledgeable in both banking systems and commercial financing would contribute
greatly to the negotiations."
Other options the Grand Jury
mentioned were for the district to seek a grant to pay off the debt,
negotiating a sale/lease-back agreement for the Activity Center, deeding the
building back to the bank and moving to another facility, or declaring
bankruptcy. Those were options given to the board last year by then-interim
manager Tom Lando.
There were several
recommendations the district has to respond to. Among those, the Grand Jury
recommended the district continue to seek refinancing and other options to
manage the debt load; seek professional guidance and develope a long-term
financial plan, install security cameras; and explore the possibility of
setting term limits for directors.
The Mercury-Register could not
immediately reach the board or general manager for responses and will follow up
on this report.
Contact reporter Barbara
Arrigoni at 533-3136.
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