Here is the letter made public today by the State Auditor…
Management Letter
Everett Public Facilities District January 1, 2015 through December 31, 2015
Financial Condition:
The City of Everett created the Everett Public Facilities District in 2001 to operate an arena and conference center.
In the prior audit, we communicated financial condition concerns to the District in a letter to management. Our audit found that the Board dedicated more time to monitor and evaluate the financial condition of the District, and has taken steps to increase its operating revenues; however some items remain unresolved.
Specifically, the District’s net position (the difference between assets and liabilities) remains negative and has not improved significantly from the prior period. Over the past five years, the District’s ending net position is as follows:
Relationship with the City of Everett:
The District is financially reliant on the City of Everett to meet its debt obligations. In March 2014, the District’s bond rating was downgraded from “A-” to “BBB”. In October 2014, the District entered into an interlocal agreement with the City of Everett to refund one of the District’s bonds totaling $27,415,000 and place the debt in the City’s name in order to secure a better interest rate. Also, in May 2015, the District and City moved forward on a plan to replace the scoreboard in the arena. The District and City worked for two years to determine the best financing plan before the City decided to loan the District an additional $665,000 to purchase a new scoreboard.
District’s Financial Plan:
The District is aware of the concerns regarding its financial condition and has taken the following steps to address its financial condition:
The Board appointed one member to be on-site each week to discuss arena operations with contracted management.
The District continually seeks new revenue sources such as hosting new concerts and events, promoting annual events, and advertising their conference halls to encourage more variety in the rentals of the rooms.
As a result of these efforts, our audit found that the District has a positive operating margin (excluding depreciation) for the first time in the past five years.
However, without continued financial support from the City of Everett, the District would be unable to operate at its current service levels.
Further, the District is unable to meet its financial obligations without assistance from the City.
We recommend the District continue to monitor and evaluate its financial activities closely. In addition, we recommend the District strive to operate as a self-sustaining organization.
July 14, 2016
Downtown Everett, Everett, Everett Government