CAA mid-year financials comparable to last year's figures

January 26, 2009
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While Van Andel Arena closed the first half of the fisca year with a revenue surge and DeVos Place splashed deeper into the red-ink well, the financial status of the Convention and Arena Authority was comparable to last year at the midway mark.

The CAA, which oversees operations at both buildings, ended the first half of FY09 with a deficit of $1.01 million. But that shortfall was $51,211 less than the board had after six months into FY08, a year the CAA recorded an operating surplus of $448,900. That year the mid-year deficit was $1.06 million.

Total income to the CAA over the first six months of this fiscal year was down by 22 percent, or $201,624, from last year. Lower parking revenue and investment interest were two reasons income fell from $913,375 at the midway point of FY08 to $711,751 halfway through FY09.

Revenue from parking was down by 22 percent and investment interest was down by 51 percent, although the board hadn’t received the interest amount earned for December when the mid-year comparison was prepared.

The CAA receives parking revenue from a lot near the arena and from the ramp below DeVos Place, the larger of the two revenue sources.  Although the number of events held at the convention center was similar to the previous year, attendance at the events was down by roughly 50,000 this year, so fewer parkers have used the ramp, which has resulted in less revenue.

But what kept income to the CAA from falling further during the first half of this year was the one-time payment of $100,000 that the Windquest Group made to the board in November for an easement. The company, which is owned by the Dick DeVos family, is renovating the River City Building at 201 Monroe Ave. NW. The structure is at the south end of DeVos Place, and Windquest needs to access a portion of the convention center’s space to do the work.

On the expense side of the ledger, total expenditures for the first six months were down by 13 percent from the previous year, dropping from $1.97 million to $1.72 million. Utilities were down by 21 percent. Much of that dip, though, was due to Veolia Energy changing the billing method for the steam it provides to its downtown customers.

Veolia Energy is using a flat rate to recoup its capital cost after it bought the system in December from Kent County. The change means customers will receive lower bills in the winter than in previous years, but higher ones in the summer.

One expense, however, grew by 1,336 percent. The CAA spent $56,066 for legal services during the first six months of FY09, up from $3,903 over the same period last year. The reason for the increase is the multi-count lawsuit Delta-Turner LLC filed last June against the CAA and SMG, the firm that manages daily operations for the board at the arena and DeVos Place.

Delta-Turner LLC, which owns the DeltaPlex Arena and Conference Center in Walker, claimed that SMG entered into an agreement with concert promoters that directs musical performances to the arena and keeps other venues from booking those shows. Delta-Turner LLC argues that agreement violates federal and state anti-trust laws and is seeking damages in the seven figures.

The plaintiff named the CAA as owner of the arena. (The Downtown Development Authority technically owns the arena because that board makes the bond payment on the building. The DDA turned over arena operations to the CAA in 2000.)

CAA Chairman Steven Heacock said the suit was without merit. Dickinson Wright is representing the board and has filed a motion to dismiss the case, as has SMG’s attorney. U.S. District Judge Janet Neff recently heard oral arguments on the dismissal motions.

“She has indicated to our lawyers here that she expects to have a decision on whether she is going to grant the motion to dismiss by the end of the month,” said Dick Wendt, CAA counsel and partner at Dickinson Wright.

The board’s overall expenses were also down because spending on capital improvements dropped by 31 percent from last year. That outlay fell from $441,912 during the first half of FY08 to $303,208 over the first six months of this year.

The CAA will meet on Wednesday.

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