CAA delays arena improvements

February 6, 2009
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The Convention and Arena Authority will push back to next year a few capital improvement projects that were initially planned for Van Andel Arena this year.

When the board approved its CIP budget in June, the plan contained five items for the arena estimated to cost about $760,000.

The most expensive of these was a $450,000 expansion of the concourse in the building’s northwest corner, an area that arena officials said started to clog when an event drew 8,000 customers and became virtually impassible when 10,000 attended. The idea was to enlarge that corner to the front glass wall and add 2,000 square feet.

But CAA board member Lew Chamberlin said recently that the concourse expansion is likely to be deferred to the next fiscal year and that the plan may change completely by then.

In August, the CAA decided to look at options other than expanding that section of the arena, which is just north of the skywalk entrance. The board hired Progressive AE, a local architecture and engineering firm, to study the traffic circulation throughout the arena and will now wait for that report before going any further.

The CAA will also postpone the installation of a blackout curtain that would have covered the arena’s upper bowl for smaller events. The curtain and its installation were estimated to cost $225,000.

At the start of this fiscal year, the CAA adopted a CIP budget totaling $1.54 million for the arena and DeVos Place but had only spent $303,000 on improvements through the year’s first six months.

Revenue to the board from parking receipts and interest income was down by 22 percent and 51 percent, respectively, during the first half. Spending on legal services soared by 1,300 percent over the same period due to a federal lawsuit filed against the CAA last June by Delta-Turner LLC, which owns the DeltaPlex Arena and Conference Center in Walker.

Still, Jana Wallace, a debt authority officer with the city of Grand Rapids fiscal office, said the board’s overall financial condition is good.

“We still have a strong cash position of $22 million,” said Wallace, who is part of the CAA Finance Committee.

Wallace also told the board recently that she expects parking receipts to rise over the year’s second half, when most of the revenue has been collected in past years. The CAA receives parking revenue from a small lot near the arena and from the underground ramp at DeVos Place.

One revenue source the board won’t have over the year’s second half is the Grand Rapids Rampage, an Arena Football League franchise that plays its games at the arena. The league has cancelled the season and that means the arena lost eight rental dates and the CAA lost income.

But as SMG Regional General Manager Rich MacKeigan pointed out, the board wouldn’t be losing a lot of event income from the Rampage not taking to the arena’s turf eight times. That tab comes to only about $3,400 for the season, a portion of which would have spilled over into the next fiscal year.

“It’s not a money maker. It’s revenue neutral,” said MacKeigan, whose staff oversees daily operations at the arena and convention center for the CAA.

The bigger hit is that the Rampage pays the CAA $10,000 for each game the team plays in the arena and that $80,000 goes into the board’s CIP budget. Official word as to whether the league will resume play next year is expected to come by the end of this month.

“I’ve got no clue as to whether they’re coming back,” said MacKeigan, while adding that he was working with Rampage General Manager Scott Woodruff on setting game dates for 2010.

At the fiscal year’s midway mark, total expenses to the CAA were down by 13 percent from last year and total income was down by 22 percent, leaving the board with a deficit of $1 million for the year. The CAA had a similar shortfall last year, but ended that year with an operating surplus of $448,900.

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