THE NEW GILDED AGE (Part 2)
THE NEW GILDED AGE (Part 2)
Entities Seek Increased Funding on March Primary Ballot
29th January, 2020 0
Saginaw County faces 3 millage proposals for voters to decide on the March 10th Primary Ballot. One of these is a renewal for the Saginaw County Park system that remains at the same level it’s been for the past 10 years; however, one for the MSU Extension Services is an altogether new millage that will take their current $200,000 funding level and more than double it to $497,000 in the first year alone; and last but not least is a request for both a renewal and increase for the Dow Event Center that will take their current .2250 mill and double it to .450 mill, which will raise up to $2,235,972 in the first year for needed repairs on the facility.
Taken together these proposals authorize $14,618,300 for Saginaw Parks, $4,970,000 for MSU Extension, and $22,359,700 for the Dow Event Center over a 10-year period, with $16,659,860 in new taxes.
In the interest of providing an informed citizenry, the REVIEW presents this detailed breakdown and informational exchange on two of these proposals that represent significant increases over current levels of funding.
The MSU Extension Proposal
This year Saginaw County Commissioners voted to approve an operating budget for 2020 in the amount of $44,050,603 that represented a $2,334,194 increase over last year’s budget of $41,716,409. This 5.59% increase came on the heels of three millage proposals approved two years ago by only 30.22% of registered voters for non-mandated services, which increased the amount of property taxes paid by owners and renters of only 89,000 parcels of property in Saginaw County by approximately $3,454,616.
Along with their approval of the 2020 budget, Commissioners agreed to compensate this increase by drawing $2,334,194 shortfall from the county’s General Fund, which will bring what Is called the ‘Rainy Day’ fund down to approximately $18 million dollars, dropping it significantly closer to the $15 million statutory minimum required by the State of Michigan for budget stabilization for use when unexpected deficits arise.
Back in April of this year the Saginaw County Budget Audit Committee was presented six options by Saginaw County Controller Robert Belleman to reduce the budget by 2.3% across all departments, which would result in a $1.3 million savings. However, the majority of Commissioners voted to simply once again borrow against the general fund to cover these increases, rather than making any of the suggested cuts.
Since 2008 the MSU Extension has received $200,000 per year from the Saginaw County General Fund Budget. Given the very real taxation and expenditure concerns, there have been many times that County Commissioners have talked about dropping this funding to the Extension, seeing as it is for a non-mandated and non-essential service. This is why MSU Extension is asking for the millage. Under current law they are now going for $450,000 in the first year alone because it is the smallest amount (.01) that you can ask for, even though they have been living on $200,000 for years.
According to Mark Rankin, District 9 Coordinator for the MSU Extension Service, the MSU Extension tailors its programming to local needs, providing classes and workshops for Head Start, Daycare centers, parents, and families, including 4-H Youth Development, Master Gardener, Urban Agriculture, Agribusiness, health & nutrition, veteran services, and other community educational programs, based on the needs of participants.
“Prior to 2008, Saginaw County invested nearly a half million dollars in their partnership with MSU Extension,” states Rankin. “However, a financial crisis necessitated a decrease in that investment, which also led to a decrease in our services and programs. Because of this financial shortfall, we now have only 18 faculty and staff members housed in and providing programming in Saginaw County. This is down from 45 faculty and staff members prior to 2008. Though we employ high-quality, effective and efficient people, this greatly limits the services we can provide.”
“When the Saginaw County Commissioners began discussing funding MSU Extension through a millage, they decided to request .1 mill as that would restore their investment in us to the previous funding level,” he continues. “Funding at this level (which equated to about $.50/month for each homeowner in the county) will allow us to reinstate the Master Gardener program, consumer horticulture and urban gardening education, financial literacy programming and add to our health and nutrition programming. These valuable programs were offered in the past, and greatly valued by residents, but are not possible at the current investment level.”
“MSU Extension provides youth development education for young people ages 5 to 19 through Michigan 4-H where we focus on science, technology, engineering and math (STEM) and the arts,” he explains. “In rural areas, we tend to focus on traditional 4-H club model that includes livestock education. In urban areas, we focus on Special Interest Programs (SPIN) clubs – groups that meet regularly for a short period of time (usually six weeks) to go in depth on specific areas. We currently partner with local schools for in school and afterschool programming as well as the YMCA, Zoo, and other youth organizations to provide summer and evening programming. With these partners, we provide programs that are not historically provided or content that can enhance the programming and fill gaps based on the needs and interest of the youth such as: financial literacy, basic robotics, or the arts.”
“Our community development programs focus on work with the local food pantries, farmers markets, and natural resources. We partner with the DNR, MDARD, Conservation Clubs, and local collaboratives and coalitions. You may have heard about the Lake Sturgeon release, Bay Reef restoration, and Saginaw watershed projects. MSU Extension is a part of these projects because of the expertise, research, and resources that we bring to the table to support these local initiatives.”
“We also do a plethora of health and nutrition programming in Saginaw County. This includes SNAP-Education that helps people who are eligible for WIC and other food assistance programs to learn how to stretch their food dollar to make healthy meals for themselves and their families. We work with schools, senior centers, commission on aging, Health Department, Hospitals, and many other partners to provide many of the programs, workshops, and series that we provide. A portion of this programming in Saginaw County is targeted directly to veterans.”
“Through all of our programs, outreach, and partnerships every year, we reach 30,000 – 40,000 people directly, and many more are impacted by our work due to the positive changes our participants make in our communities.”
‘These programs and decisions will be based on a community needs assessment and service gap analysis because we do not want to provide duplication of service but help fill the gaps and meet the current needs of residents. These additional services would also allow us to offer more programs and substantially increase the number of residents who could benefit for our educational programs.”
“MSU Extension is one of the few departments that leverage county investments for more funding coming in to the county. Every dollar we receive from the county brings in an additional $5 in state, federal, and grant funding.”
“MSU spends over $1.8 million a year on local businesses and has over a $35 million economic impact on the community. This research and analysis was conducted by the Anderson Economic Group and is independent from MSU. Other County departments do not leverage funds to bring in additional resources or funding nor do they have the economic impact as MSU Extension.”
“ If passed, this will be the smallest millage in the county, yet MSU Extension brings significant economic impact and has the ability to improve lives through research and education.”
Dow Event Center • Millage Requests to Return to 2001-2010 Funding Level
According to General Manager Jon Block, since 2001 Saginaw’s Dow Event Center has brought an average of over 250,000 visitors per year to Downtown Saginaw, creating a culminative impact of 4.5 million visitors to the region over a 20-year period. Since 2010 the Event Center has spent an estimated $6 million with local businesses and 80% of ticketed non-hockey visitors are from outside Saginaw County, spending money on restaurants, gas, and hotels that fuel the local economy.
The Event Center was originally built in 1972 with major renovations occurring in 2001, however the parking ramp, ice plant and other areas remain largely original to 1972, meaning they have fallen into disrepair. Consequently, key capital investments are needed to replace a leaking roof, make ice plant repairs in the arena, repair and replace elevators and upgrade the deteriorating Parking Ramp, along with additional repairs and renovations in order to continue operating.
Consequently, a proposed Millage Renewal & Increase for the Event Center will be placed on the March ballot that requests a return to the original rate of .45 mills passed in 2001, which is in increase that doubles the current .2250 mill for the next 10 years, which levy is estimated to raise up to $2,235,972 in the first year alone.
In terms of background & context, back in the late 1990s the facility nearly faced foreclosure & bankruptcy due to lack of funds provided by the City of Saginaw. Because Saginaw City hall could no longer afford to pay an operating subsidy that had reached nearly $800,000 per year, Saginaw County took ownership from the city on May 8, 2001 following a successful millage campaign and the Center underwent a series of renovations in the early 2000s that were tagged at $14 million and completed in 2003.
Proponents of the original tax asserted that the Civic Center’s budget would be streamlined by professionals from Philadelphia-based SMG Management. But the tax subsidy, now described as an “operations gap,” remained at $700,000 under SMG, even with Dow Chemical Co. sponsorship of $172,000 for renaming of The Dow Event Center, which is paid annually under their contract, until it comes up for re-negotiation in 2024.
This millage subsidy is not unique insofar as Civic Centers in numerous communities across the nation all require tax support in order to operate. Indeed, utility costs alone have averaged around $500,000 per year at the Event Center; however, Block is quick to point out that the ‘operations gap’ fluctuates from year-to-year and right now the operational budget is down to $695,000 because of high attendance and the number of shows and programs featured at the facility.
According to Block, in 2019 the Center staged around 175 events with attendance just over 265,000. “We featured more impactful events, starting with the Bob Seger concert, plus the Saginaw Spirit made it into the playoffs, which doesn’t happen every year, so we drew higher numbers,” he notes.
In terms of regional impact, the Event Center currently employs 12 full time and 155 part-time staff and since October 2010 over $9.5 million in wages have been paid out to employees. In the past year alone, the Event Center has donated over $16,500 in event tickets to assist nonprofit organizations in raising money and utilizes the services of many non-profits to sell concessions and assist with parking.
Since October 2010, the Event Center spent over $545,000 with these non-profits and over $6 million with business and organizations with billing addresses within Saginaw County.
In terms of revenue breakdowns from 2010-Sept, 2019, $3.4 million or 30% of income is derived from Saginaw Spirit Hockey games, $3.3 million or $29% from Theatrical Entertainment, $2.1 Million or 18% from Concerts, $811,000 or 7% from Community Rentals, $454,000 or 4% from Miscellaneous rentals, and $317,000 or 3% from Banquets, for a total of $11,382,000, or $1,264,666 per year for all events. This number will fluctuate up and down every year depending upon the size & schedule of events.
The needed repairs at the Center and costs involved include the following and is not inclusive of all the items that need to be addressed, which will be approached in various phases. Roof Replacement for Arena, Administrative Office Roof, Theatre Roof, and Atrium Roof $1,155,000; Parking Ramp Repairs $2,329,000; Phase 2 Priority Repairs to levels 5, 6 & roof of Parking Ramp, $1,947,000, Parking Ramp Phase 3, $1,367,000 to levels 2. Parking Ramp Phase 4 - upgrade electric, lighting and re-engineer for hourly parking, $750,000, Elevator Repair & Replacement $465,000, Replace Hockey Board & Glass System and Ice Floor, $850,000; Replace/Rebuild 3 Ice Plant Compressors (original to building 1973) $325,000; Bathroom renovation in arena and theatre, $150,000; Overhaul Theatre HVACs & 6 Air Handlers, $350,000; Automatic Sprinkler Installation (per county solicited insurance inspection) $450,000. Locker Room Upgrades $100,000; Zamboni Replacement $200,000; replace original theatre seats $350,000.
With the proposed new $22,592,850 in millage revenue over a 10-year period if this proposal passes, the amount dedicated to improvements amounts to $9,988,000 in Phase 1 Investments, $1,309,500 in Phase 2 Investments, $785,000 in Phase 3 Investments; an $1,246,000 in Phase 4 investments for a total of $13,414,000 in capital improvements. With $8,140,000 budgeted out of this to cover the cost for annual operations over a 10-year period (an average of $814,000 per year) and another $1.4 million ($140,000 per year) to cover the parking bond, any remaining revenues from the millage are dedicated to maintenance, according to Block.
“The current millage is only for operations and capital expenses,” explains Block, “any requests we have beyond that over the amount of $5,000 must be requested from the County and does not get applied to the operational budget.”
Any excess revenues made beyond that goes back to the County.
Another way to look at this is that over a 20-year period with approximately $11 million coming from the existing 10-year millage and $22,359,720 from the original 10-year millage, approximately $7.45 has been spent by taxpayers for each of those 4.5 million visitors, who in turn go to restaurants, stay in hotels, and help fuel the local economy.
Perceptions on Moving Forward
Despite the recent closures of The Bancroft Martini Bar, Bourbon & Co, Bradley’s Bistro, and many other downtown businesses struggling, several of those entities have lamented that especially during the summer months, Huntington Event Park and The Dow are not staging enough events to draw bodies downtown and into their businesses.
According to Block, however, the fact SMG recently merged with ASM Global will bring in more bargaining power because of an increased pool of venues and resources to draw from when it comes to booking major events.
“The Huntington Event Park this past summer had better attendance numbers than ever,” comments Block. “The Park has been embraced by the community for Community events, which is its primary focus. We don’t take risks on shows. Other venues have a fund to spend on bigger shows, but we do not have that, so in order to book bigger shows we need to work with other promoters. Frankly, with some of the bigger shows we’ve booked in the past such as Chicago and The Beach Boys, the sales weren’t there, so we have to focus on what works in this market.”
“We took a pause two summers ago, but last year featured Gary Allen, Hairball, Summer Breeze Comedy Show, and added three or four major events,” he continues. “This year our goal is to feature five or six of them. Country music is big in this market, so when people don’t support other types of bigger shows, they are basically voting on what they wish to see and support. Our goal is to build momentum around the types of shows that people want.”
So in a ‘Worse Case Scenario’, if this new request fails, will the Event Center be able to go back to voters in the General Election and ask for a renewal at the current level?
“Are you able to live in a house without a roof?,’ asks Block. “These are big projects and the original millage was cut back so we’ve been saving taxpayers half the millage for 10-years now. Things like having a roof that isn’t leaking and a parking lot that isn’t crumbling are big projects and these things need to be done in order for us to function.”
“My directive from the County is that if this millage doesn’t pass, we can’t operate,” concludes Block. “If funds are not there to make necessary repairs there is not a way we can continue to operate this facility. They’re not really improvements - we’re talking guts. We’re not building anything additional, but trying to maintain what we have so we can operate.”
“I believe voters will make the right decision, but I’m also scared. As a lifelong Saginaw county resident and a person who grew up on a farm in Frankenmuth and lived & worked in Downtown Saginaw since 2004, I’m scared to see the effect on the downtown if this millage doesn’t pass.”
“We’ll have another boarded up building and the loss of 250,000 people per year who come here and spend money. The Dow Event Center is still the Number One driver of traffic to downtown Saginaw and even with its current struggles, we are making progress downtown. My fear is the reversal of all this progress.”
“But if this passes, the result will be more visitors and revenue from outside county to Downtown Saginaw, more economic development, more support for non-profits, more jobs for local residents, more live entertainment, over $6 million put into the local economy via local vendor services utilized, and continuation of building and strengthening our urban core.”
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THE NEW GILDED AGE (Part 2)