• – Standard & Poor’s downgrade in 2018, 2020 on Fairgrounds JPA bond ratings • – Fairgrounds Operating budget impacted by COVID • Cancelation of 2020 NHSFR & postponement FMCA facility-wide events using new improvements: over $1.5M revenue lost alone • Shut mid-March to June (3.5 months): over 150 events canceled with 350,000 visitor days to date & now only at 25% capacity • Risk NHSFR 2021 lower revenues than budgeted • $350K of interest and other rodeo startup costs still obligated to pay to meet NHSFR 2021 contract – Highly likely fairgrounds required to shut in winter due to COVID health directives limiting gatherings — if this happens, haven’t identified funding to keep core expert staff, utilities, basic maintenance paid on this $30M asset we’ve built over last 20 years • – Furloughed 84 part-time and 8 full-time staff – Received $407K from PPP and $149K from EIDL federal stimulus COVID funds to date as a 501(c)3 non profit – Received $12K nonprofit grant from $1.1B State COVID relief funds to date – Lobbying at State and Federal levels for added COVID relief funds – Statutorily can’t ask for more operating levy without public election • state lid law 3.5% increase max per year = limit added $8K/yr on $230K fair operating levy – One of few remaining options is discussion of this 2020/21 Ag Society capital levy for fairgrounds to ease pressure on operating budget
Capital Budget Item Amount *All these uses of capital levy have been confirmed with State Auditor’s Office (Deann Haeffner Assistant Deputy State Auditor) as valid uses to do “real improvements to building & land” including associated financing costs .
Due to 2000 State Property Tax Lid Law (max 3.5% increase/year) Fairgrounds levy as percentage of county rate has declined Fair Capital JPA 2006 0.052% 0.029% 0.186% 2007 0.050% 0.025% 0.206% 2008 0.051% 0.022% 0.188% • 2009 0.052% 0.030% 0.190% 2010 0.052% 0.030% 0.191% 2011 0.051% 0.027% 0.184% • 2012 0.049% 0.026% 0.174% Fairgrounds levy not keeping up with inflation (2004 Dollars) 2013 0.048% 0.026% 0.168% 2014 0.049% 0.026% 0.166% • 2015 0.047% 0.025% 0.151% 2016 0.047% 0.026% 0.149% 2017 0.045% 0.025% 0.138% 2018 0.045% 0.024% 0.137% 2019 0.043% 0.024% 0.123% despite dramatic growth of the fairgrounds facilities, community & economic impact in same time frame
Note: post- COVID estimate assumes “fully open” on Oct 1 st which is optimistic • 2020 growth estimate was +50% due to opening of new national event campground & grandstand with two • facility-wide international events booked in first 45 days: NHSFR and FMCA RV Convention Kudos to the County Board’s vision for LEC: The County Board that approved the original bonds to build the LEC fairgrounds in 2000 asked the Ag Society to keep the fairgrounds open all year round for events — the County Board’s vision & Ag Society’s hard work has paid off for the county!
*2017 LEC Fairgrounds Economic Impact Study with Not updated to reflect growth since 2017 yet hundreds of in-person interviews of LEC visitors by UNL Bureau of Business Research led by Dr. Eric Thompson Subsequent years estimated impact at same spend/day/attendee assumed as LEC visitors continued to grow since this study
Similar large ag fairgrounds facilities in Midwest, across USA The Ranch fairgrounds in Loveland CO — 15 cents/$100 sales tax collected for 20 years • Oklahoma City State Fair Park — 3.5% lodging tax • Rock Springs & Gillette Wyoming facilities — state grants & loans for facility improvements to • win national events like NHSFR Nationally — facilities our size receive minimum annual $750K to $1M public support for • maintenance/operations due to economic impact (Susan Sieger, Crossroads Consulting) PBA Lincoln (bonds, operational funding) 4% lodging tax on all hotels, camping (including LEC’s campground), rental cars • 2% on all prepared food & beverage at all bars/restaurants (e.g. $142 million in 5 years including • $$ sent in by LEC for LEC food & beverage sales) COVID recently requested added $600K subsidy in 2020 on top of normal annual $1.8M • operating support Versus other Nebraska county fairgrounds Lancaster fairgrounds: $1.20/county citizen vs. most NE fairs at $20-30/citizen (see chart → ) • Lancaster’s county fair has grown to be the largest in the state with 120,000 attendees over 10 • days including 700 4-H/FFA youth bringing 5000 projects plus hundreds open class community exhibitors Source: State of NE property tax records for largest NE county Why? “Historical oddity” (coined by our banker, Carl Sjulin with West Gate Bank) since • fairgrounds (as of 2018 audit) Lancaster county fairgrounds 130-year history sharing fairground with the State Fair. Property tax support for our fair locked in by State Lid Law around 2000 when Lancaster Co Fair only couple days with 5000 people held in borrowed buildings on State fairgrounds vs. now 10 days, 120,000 attendees since State Fair left Lincoln in 2010.
Impact of COVID LEC fairgrounds 100% shuttered March 14 to June 24, 2020 — 3 1/2 months • Opened June 25 th at 25-50% capacity per local health guidelines • NHSFR (July 2020) not allowed to come in mid-July; still contracted 2021, 2026, 2027 – FMCA Convention (Aug 2020) w/ 2000 RVs postponed to 2022 based on health concerns for older RV rally crowd – Anticipating running at 0-25% capacity during busy, most profitable indoor people show season Dec – March due to size of events 2000-10000 people/day • COVID funding support for fairgrounds to date: PPP loan (as 501c3 nonprofit): $407K = 2 months payroll & some utilities, majority will be forgiven • Economic Injury Disaster Loan (EIDL) from SBA: $150K = 1 month payroll, excellent 30 year payback • Request to State to offset increased COVID costs for the NHSFR: denied • State COVID non-profit grants $12K: recently approved =1/6 of month payroll • State COVID small business grant $12K: denied • West Gate Bank: our banker has allowed us to slow down payment on lines of credit e.g. rodeo construction loan • Pending financial support proposals Lancaster County Capital Levy proposal — up to $2.3M; first time ask in 20 year history of LEC fairgrounds; would be a small property tax increase (3/4 • penny = $27/average household); will help with capital obligations to decrease pressure on operating budget to survive rest of COVID Main Street Lending (Treasury recently opened to non profits): researching, much 5 year payback will be challenging • Lobbying for new federal stimulus support to fairgrounds/event centers with our three association groups: Congressman Fortenberry, Senator Fischer, • Senator Sasse Existing $1B+ State CARES Act Stimulus NE Fund • Other ideas? •
Like most event facilities, LEC is not able to self-fund a significant capital • budget but has improved profit in its relaunch started in 2015 Since 2015, LEC has: • – Found numerous untapped non- profit, gov’t. purchase discounts – Raised rent, ensure charging for all custom services – Added user “facility improvement” fees for trade show vendors, spectators – Kept salaries below market rate – Self-perform most maintenance, improvements – Increased revenues/profits by attracting new larger shows e.g. NHSFR, FMCA, national horse shows Recently added COVID fees as reopening: • – Asking COVID-cancelled events to pay half-rent — only few are paying – Cleaning horse stalls COVID-increased labor cost fee: +$20/stall/week – People spaces COVID cleaning fee: +$2.50/visitor/full day
Baseline expenses to keep this $30M asset safe • – Utilities – Equipment leases – COVID-related extra operating costs — higher labor cost per hour, more cleaning time & materials, equipment to clean/protect Maintain expert core staff to protect the facility and to plan for faster re-opening • – Experts that run nationally-recognized shows, turn the 160 acres quickly between variety of events – Events take 3-5 years to book and to build to size in normal times if we lose current bookings Keeping LEC open to the community • – Fair, 4-H/FFA youth year-round – blood drives, election site, COVID test site, food distribution, non- profit, small business, gov’t. events – NEW use as larger safe gathering location for variety of events e.g. joint City/County meeting Performing on new national event contracts • – 2021 — NHSFR – 2022 — FMCA – Others inquiring to book what is now 10 th largest event center campground in USA
2022-27: Principal to be paid down by VPC rodeo grant as shown Date Principal Interest Est. Grant Payment 2019 Interest $28,125 2019-2027: Plan was to pay the interest only payments to be paid by 2020 Interest $174,375 operational revenues locked in with new national event contracts using these new rodeo improvements 2021 Interest $180,000 2022 Interest $152,500 $600,000 Challenge: COVID pandemic cancelled first 2 facility-wide 2023 Interest $122,500 $600,000 events using the new improvements in first 45 days in 2020 to earn largest interest payments: 2024 Interest $92,500 $600,000 1. NHSFR July 2020: contract remains for 2021, 2026, 2027 2025 Interest $62,500 $600,000 2. FMCA RV Intl Convention: Aug 2020 (rescheduled to 2022) 2026 Interest $55,000 $600,000 2027 Interest $25,000 $600,000 Unlikely with COVID to rent out these improvements before Total Interest $892,500 $3,600,000 these already contracted events in 2021, 2022
Recommend
More recommend
