CAA adopts operating budget

June 26, 2010
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Members of the Convention and Arena Authority met in a special session Friday to adopt the fiscal year operating budgets for DeVos Place, Van Andel Arena and the board itself. Six of the board’s seven members were on hand to form the necessary quorum needed to take action on the spending plans and they unanimously adopted all three.

CCA Chairman Steven Heacock called for the special meeting after the board adopted the budgets with only three members present and voting on June 4, one member short of a quorum. Two state statutes, the Convention Facility Authority Act of 1999 and the Open Meetings Act of 1976, require a quorum, a simple majority, be present to vote on substantive issues like operating budgets.

“I don’t want to do what the federal government has done and not have a budget,” said Heacock on Friday referring to the shutdown that occurred in Washington, D.C. more than a decade ago.

Joy Yearout, deputy director of communications for the Michigan Attorney General’s office, told the Business Journal that a local unit of government is required to adopt a budget for each fiscal year, according to the Uniform Budgeting and Accounting Act of 1968.

“If a budget is not adopted by the commencement of a fiscal year, the local authority does not, to our knowledge, lose access to its funds. However, any official who expends funds in the absence of an appropriation would be acting contrary to the requirements of MCL 141.436 to MCL 141.440,” said Yearout.

“In our experience, local units of government are occasionally late in adopting their budgets by the beginning of the fiscal year, but will adopt one promptly in order to comply with these requirements so that the local unit can meet its contractual obligations,” she said.

As for the operating budgets, DeVos Place has been projected to have adjusted gross income of $4.5 million in 2011 with total expenses reaching $5.2 million resulting in a fiscal-year deficit of $711,000.  Adjusted gross income to the arena is forecasted at $5.1 million with total expenses of $3.9 million for a surplus of $1.2 million.

The CAA is expected to have total revenue of $4.1 million and total expenses of $7.2 million for a deficit of $3.1 million in 2011. The board’s expenditures are higher this year because the CAA plans to spend $4 million in the fiscal year on capital improvement projects, its highest CIP budget in recent years. The CAA begins the year with about $20 million in its reserve account.

At the special session, the board gave SMG the green light to select a contractor for the arena concourse expansion project that will add about 3,500 square feet to the northwest corner of the building. SMG Regional General Manager and CAA Executive Director Rich MacKeigan said seven West Michigan firms made bids on the project that ranged from $675,000 to $902,000. All the bids were well below the $1.2 million the CAA set aside for the work. MacKeigan said a contractor could be chosen this week and work could begin in July.

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