Mosaic Place Financial Statements All About Red Ink
Mosaic Place said back to losing $1 million annually
By Robert Thomas
By all appearances the 2019 Audited Financial Statements for Mosaic Place could be typified by some as a sea of red but it was the at times heated discussion that had some members of Council seeing red on Monday evening.
The issue was not what was in the financial statements but rather how they, and two varying versions of the history, of where Mosaic Place sits at the present time.
Speaking to Council city manager Jim Puffalt said that 2019 was a hybrid year as the facility went from direct control by Council and two physical facilities to one facility ran by a management company.
“We wanted to give a comparisson prior to the transition year and that takes taking the audit of Mosaic Place and the audit of the DFFH (Downtown Facility and Field House) and putting it all together and explaining what happened,” Puffalt said.
He went on to state there were a number of factors to take into consideration when preparing the 2019 financial audit to other years.
Those factors were how deferred revenue from Ticket Rocket was handled, not requesting the full subsidy from the City, costs associated with winding the DFFH up with staff no longer employed by the City having payouts and then going to work for Spectra (the management company now running Mosaic Place on the City’s behalf), legal fees, hiring a human resources professional and a major breakdown to the cooling tower costing $51,000 to repair.
“It was a fairly difficult and complex year so we wanted to present the combined document to compare back to a previous year,” Puffalt said. “We are at compareable levels as to how other years worked.”
Ryan MacIvor general manager at Mosaic Place for Spectra Venue Management said the management company was hired too late in 2019 to have any real effect on the financial outcome.
“We didn’t really have any impact as the budgets were done…it really was our opportunity to work and review it, analyse it and look at it. And just take a step back and monitor it…our role was to provide stability,” MacIvor said.
Questions From Council
Councillor Heather Eby asked MacIvor the reason behind the decrease in ice rentals at the facility since 2016.
“From 2016 to 2019 there was quite a decrease in ice rentals so I was just wondering where that is coming from?” Councillor Eby asked.
MacIvor said part of the reason was that minor tenants chaged from a traditional non-peak time to peak time of use so they went to other City faicilities that could accomodate them.
“Those clients were displaced to the other City facilities so we in working with Mr Puffalt and Mr (Derek) Blais (City of Moose Jaw parks and recreation director) that although the venue the number may have gone down the overall aggregate net effect is a positive overall to the City as those user groups moved over to the Kinsmen or the Bert Hunt or other properties that the City has,” he said.
Councillor Eby asked about the wisdom to increase fees for curlng at the same time there was a drop in curling participation.
“I really know when you increase those fees in a time when people are not sure they want to go anyways it just makes the decision a whole lot easier not to join leagues,” Eby said.
MacIvor said the increased fees on curling were not across the board but the ability to pay hgher fees.
“Those fees did not go up for all leagues and all users it was more of a pinpointed approach in terms of some of the specifc leagues in terms of the ability to pay, youth group, commercial league excetea so we took a targetted approach to that,” he replied.
Curling fees have not gone up at the Ford Curling Centre in the last three years.
Councillor Scott McMann asked where the results of some of the concerts were in the Audited Statements.
“Certainly lost in the transition costs are some of the results of some of the concerts and bowl events and theat type of thing and it appears that the net loss was about $250,000 that the citizens are going to be responsible for and certainly the previous board was criticized quite frequently about the number of concerts and I recognize concerts and events are very difficult to project…but I guess $250,000 is fairly substantial and there wasn’t any mention of any of that,” Councillor McMann said.
“So I am just wondering is there just one or two specific events that caused a lot of that. Or was it a combination of not enough people attending and costs too high?” he asked.
Puffalt said part of the problem was a different person doing the financials and how the financials were reported.
He gave the example of how in the past security for the Warriors games was not broken out from the financials and how that impacts a new means of reporting. Additionally expenses were assigned to Mosaic Place that should have shown up as shared with the curling club.
“When you take in the overall picture of what happened last year again then overall there was a loss,” Puffalt said. “I think there is a different way of coding the invoices to some degree.”
Puffalt said in future the events profits and losses would be broken down more precisely by Spectra Management but at the same time the amounts would not be publicly available due to the secrecy surrounding concert contracts in the entertainment industry.
Council Discussion
Councillor Brian Swanson started out the Council discusson by stating the losses or red ink throughout the year at Mosaic Place. A discussion which devolved later into personal shots taken by council members.
“I point out for the first statement from January 1st to September 2nd expenditures exceeded revenues by $694,233 for period September 3rd to December 31st expenditures exceeded revenues by $122,381 for a combined loss of $816,614 and I know that the City hadn’t provided any subsidy it was budgetted in the $500,000 range still the total loss of $816,614 of which $148,000 is attributed to curling. There was $141,593 payment to Spectra last year as well,” Councllor Swanson stated.
The red started to flow in the Council chamber as he provided an alternative version of the hstory of Mosaic Place.
He spoke about the initial $1.3 million subsidy that was given to Mosaic Place when it was officially opened describing it as “way more than what was necessary to operate the facility.”
“That is wny at the end of 2011 it showed a surplus of $831,000,” he said going on to state in following years they used the initial “excessive subsidy” in other years.
“They were burning through the initial excessive subsidy…that $1.3 million windfall was gone plus more…the latest statement prior to the dissolution of the board by the Mayor and Councillors Warren and Luhning the surplus at Mosaic Place DFFH was up to $781,000. At the end of this year, 18 months later, that $781,000 surplus is a negative $190,582,” Councillor Swanson said.
Councillor Swanson asked when would a request be coming forward to Council requesting an additional $300,000 from the City would be made.
“It is my understanding that $300,000 was already released to Mosaic Place,” finance director Brian Acker responded.
“So just to be sure that wasn’t budgetted for?” Councillor Swanson asked.
That will certainly put them over budget as we are trending now it looks like the overall subsidy including the equipment reserve contribution will be in the $1 million range for that faciltiy,” Acker replied.
Councillor Swanson then asked if some type of report was not needed for the additional $300,000 required by Mosaic Place.
“That was included in one of the Budget updates to Council in the Summer,” Puffalt responded.
“I guess I must have missed that,” he said.
“I just want to make the point everybody else can paint the rosey picture that they want but that facilitiy is back to losing a million bucks a year. ”
After a bit of a silence Pufflat said the COVID - 19 pandemic had a major impact.
“Nobody anticipated COVID - 19 would come and shut us down in early March so I don’t know 2020 is a year that you can compare and hang your hat on. There are a number of extenuating circumstances that have caused issues,” he said. “We had to close down facilities. There was no ice there was no opportunity to generate revenue when you cut expenses as much as possible.”
Puffalt said that 2020 was not a good year to compare to because of COVID - 19 but 2021 would have opportunities generate funding and get back to more normal operations.
MacIvor said that COVID - 19 meant many events that took place are not happening. Events that could take place are not as groups were reluctant to do any bookings and the main tenant the Moose Jaw Warriors have had to postpone their season after it looked like the WHL was set to start in September but was twice delayed.
“So there has been a lot of extenuating circumstances within the facility. We laid off almost 45 percent of the staff for six months during that time reviewing from top to bottom all of the policies and procedures within the faciltiy so when do bring back the staff as we are doing at this time that we are ready to operate,” he said.
There are additional contracts that had to be maintained such as the ammonia plant and others MacIvor said.
Despite the reasons given Councillor Swanson restated the loss prior to COVID - 19 was $816,614.
Things Turn Nasty
Following Councillor Swanson’s take on the history at Mosaic Place Councillor Dawn Luhning said she felt it “was necessary” to respond.
“I think that what needs to be stated here is that until Spectra came on the scene of September 2019 Mr Puffalt and his staff did his best to operate that facility off of the side of his desk after Mayor Tolmie, me and Councillor Warren were provided a heads up on something that had happened over there and we took the necessary action to try to resolve it the best we could,” Councillor Luhning stated.
She said that Mosaic Place could not focus on operating as it should have given the events which occured there.
“To point out the facility lost $800,000 I want to stress here there were extenuating circumstances from July of 2018 until Spectra came on the scene in 2019 and I think this city has to hear that statement because there are two sides to this story…I was part of that board and I don’t regret one minute of it.”
See video below.
Passing the gavel Councillor Chris Warren said Councillor Swanson “forgot to mention as chairman of the (DFFH) board failed to deal with a serious personnel matter and breached the code of ethics.”
“We wouldn’t be in the challenge we faced in 2019 without that major disruption to that building. This Council took action we did something we should have done a long time ago and we brought in Spectra who is a third party professional in the industry to run Mosaic Place. You know what I was so excited things were on the right track, things were looking so good…things were looking really good and then COVID hit,” Councillor Warren stated.
See video below.
“My opinion of Mosaic Place under the management of Spectra this is the sky is the limit. This is going to be a major economic generator in the commmunity,” he said.
In response Councillor Swanson said he had been singled out for the problems at Mosaic Place and what is known as the Mosaic Place scandal but that the DFFH acted as a board and not individuals.
“The idea that we failed to do something I think is not true and I just recall the words of another Councillor what happened there 'refering to it as a miscarriage of justice and I totally believe that.”
“I was talking about the financial numbersthey were never better there,” Councillor Swanson stated.
See video below.
“When we became aware of things we worked to deal with it,” he said.
The financial statements were then received and filed in a unanimous vote.
EDITOR’S NOTE - MJ Independent is in the final stages of a publishing an investigative story we have spent five months working on probing into a related development involving the DFFH scandal. Please stand by.