Citizen sifts through redevelopment bookkeeping, cites fiscal drain on town

Camden and the Snow Bowl redevelopment: One citizen’s inquiry into the cash flow

Lynda Clancy

Thu, 02/02/2017 - 1:45pm

Chris Morong, owner of Mt. Battie Carwash, in Camden, figures he has spent more than 200 hours scrutinizing the redevelopment finances at the Camden Snow Bowl, and he still has questions. (Photo by Lynda Clancy)

Attachments

Chris Morong Ltr.pdf

Question 4.pdf

Question 3.pdf

CAMDEN — In mid-January, the Camden Select Board voted unanimously to spend $12,000 from its own contingency on an audit of the Snow Bowl’s $6.8 million redevelopment project, which has been underway since 2014. The decision followed a closed-door meeting of the Select Board to address an undisclosed personnel issue. The reason, according to board members, was that they wanted a “good sense of the money trail.”

The Snow Bowl investment was to upgrade the town-owned ski facility, with a goal of expanding Camden’s outdoor economy. The redevelopment has been a project funded by a $2 million municipal bond, as well as a private $4.5 million fundraising effort on the part of the nonprofit Ragged Mountain Foundation.

The public/private partnership represented a collaborative effort by local citizens to improve their ski mountain, where a large community, from kindergarteners to the elderly, enjoy the winter season.

But project costs grew, and the bookkeeping got murky. The town has been close-lipped about the need for an audit, other than to say that its completion is expected by Feb. 15, or earlier, and the numbers will then be made clear to the public.

One Camden citizen, Chris Morong, has spent the last eight months digging into the Snow Bowl finances, even to the point of submitting his own request to the town for data under the Freedom of Information Act.

He has pored over the invoices and payments, and based on his own analysis, suggests that Camden has erroneously spent money from its own coffers to cover redevelopment costs.

Furthermore, he said, Camden may not have fully invoiced the Foundation.

The municipal bookkeeping is “not indicative of prudent management,” he said.

The town has declined to comment on any figures, saying it will wait for the audit to be completed before discussing them.

Town Attorney Bill Kelly has warned against drawing premature conclusions from any numbers that Morong, or others, have presented, until the audit is finished.

Morong understands that the auditors, who are stationed at the Town Office now sifting through documents, may arrive at a different conclusion as to how the cash flow has progressed; in fact, he hopes they do.

Still, his questions remain.

Was there a written agreement/contract between Camden and the Foundation outlining payment terms and conditions, he wants to know. Did the Select Board know how much the Foundation had reimbursed the town? Did the town transfer funds from its surplus, and if so, did the voters approve that?

Morong has produced a fiscal summary that he said was provided to him by former Town Manager Patricia Finnigan and which indicates the Foundation was invoiced for $3.8 million of the $4.5 million that the Foundation originally pledged. He based his conclusions on his FOIA results. (See attached PDFs).

It is a complicated weave of invoices and payments, and the Foundation said it has paid all of the bills that the town has submitted.

Snow Bowl Project

The mountain has been supported by the town in varying degrees since the town assumed ownership of its real estate and operations in 1983.

In 1990-91, Camden voters approved funding the Snow Bowl with $149,000 of their tax dollars; in 2009-2010, it was $55,000. In 2012, and following several years of good snowfall, the town contributed zero dollars.

In 2008, Camden voters approved a non-binding measure that positioned support for borrowing up to $2 million for Ragged Mountain Recreation Area improvements, if matched by a minimum of $4.5 million raised via private money by the nonprofit Ragged Mountain Foundation.

Following that vote, project proponents commenced soliciting contributions, as well as holding public fundraisers.

Voters in 2013 approved moving forward with the $2 million expenditure for the mountain. The project included trail-clearing and building, a new chairlift, expanded snowmaking capacity, sewer and parking lot improvements, and construction of a new lodge.

The Foundation met its $4.5 million fundraising mark, with a cushion of almost $300,000.

The matching funds — $2 million of town funds and $4.5 million in donations — were to be expended together, not one before the other, and expenditures were planned to match the cash flow of donations over a two-year period.

The intent was to “provide the capacity to accommodate up to 600 skiers per day with adequate parking, lodge space, uphill lift capacity, and ski terrain serviced by snowmaking and enhance year-round trail use for hikers and mountain biking,” according to the plan.

A 2013 report generated by an independent firm, and paid for the Foundation, concluded: “All together, the improvements will provide a comfortable carrying capacity of 600 visitors and a peak capacity of 1,000 visitors with adequate parking, lodge space and ski/snowboard terrain, generating an average of 35,000 skier visits annually.”

Project projects included in an independent sustainability plan paid for by the Foundation established the business goal by which the Snow Bowl has been operating for the past three years.

Aside from debt obligation, the projected budget included no town matching funds in 2015 and 2016. Instead, the budget anticipated additional revenue would derive from the increased numbers of daily and season ski tickets, ski school enrollment and new lodge rentals.

Instead, warm winters and project over-costs dampened budgets.

Because of over-costs, the project cost increased from $6.5 million to $6.8 million, before the new lodge was even built.

Today, the project is finished, except for the new lodge.

Over the course of two years, the Snow Bowl incurred a $300,000 deficit, attributed to a slow season start, mechanical issues and warm weather.

That deficit was absolved by Camden taxpayers at June 2016 Town Meeting, when they voted to absorb it by increasing their own taxes.

The mountain, many agreed at town meeting, was integral to community fabric and economic health.

In July 2016, the Camden Select Board approved a $926,000 budget for the 2016-2017 season, with the hopes of better snowfall and stronger revenue.

“The Foundation has paid its bills,” said the nonprofit’s president, Bob Gordon, on Jan. 28. “The Foundation is up-to-date on the invoices through Jan. 1.”

But have all the invoices been submitted to the Foundation?

On Jan. 9, following an eight-month gap, Camden submitted an invoice to the Foundation. But both the town and the Foundation declined to specify the amount, preferring to wait for the audit results before going public with any numbers.

“I worry that there are some questionable numbers out there,” said Gordon. “We want to have the facts.”

The municipal bookkeeping has troubled Morong since last spring, and he has been dogging the town office since then to better understand the Snow Bowl budget and redevelopment finances.

Why?

He cares about the mountain, and it is personal to him. The ball field where Five Town Football and summer softball is now played once was his grandfather’s cow pasture.

“I grew up there skiing,” Morong said. “I brought up my children skiing there, and I want my grandchildren to ski there. And, I want to get the Snow Bowl back on solid financial footing. It is as simple as that.”

The redevelopment

In 2013, the voters of Camden approved bonding $2 million for what was to be a $6.5 million earthworks and improvement project at the Camden Snow Bowl. Trails were to be widened, a new chairlift installed, parking lot and sewer rebuilt, and a new lodge constructed.

After two years of heavy snowfall, the Snow Bowl, which operates under a municipal enterprise budget — meaning it is not part of the town’s general budget, and not subject to Budget Committee review — was in the black and the mood was optimistic.

The municipal bond was to be matched by $4.5 million raised through contributions made to the nonprofit Ragged Mountain Foundation. That organization was established in 1992 by local residents, and its mission is to support capital improvements at the Snow Bowl.

The town-appointed Camden Ragged Mountain Redevelopment Committee led the planning and implementation of the project. The committee consisted of volunteers, some of whom sat on the Foundation’s board of directors, and a few town staff members.

The redevelopment represented a common goal, which was that the town, and region, would benefit from more skiers and visitors, and the local economy would get a year-round boost.

Growing financial pain at the Snow Bowl

The original plan was to have two project phases, but in 2015, it was extended to three phases. Originally, storm water improvements, erosion control, and grading work on the south parking lot were to occur in Phase 2, when the new lodge was to be built. But cost overruns and project delays in 2014 resulted in Phase 2 splitting, with the new lodge being pushed out as Phase 3.

The first phase was completed in time for the 2014-2015 ski season, and included tree removal, mountainside grading, piping for increased snow-making capacity, new trail construction and installation of the new triple chairlift. Weather and equipment issues delayed the official opening date of the mountain until Jan. 31.

Those same factors, plus project cost over-runs, bled into the general operating budget of the Snow Bowl, and after two years, a deficit grew.

The deficit for the 2015-2016 season stood at $216,303, and the deficit for the previous season, 2014-2015, was $82,633. Together, the Snow Bowl hovered in the red at approximately $297,000.

The situation at the Snow Bowl began to affect other town budgets. In Spring 2016, the Select Board had chastised itself for not paying closer fiscal attention to the mountain.

Town Manager Finnigan froze all municipal expenditures and was directed by the Select Board to investigate ways to recover the budget.

On May 10, 2016, the Camden Select Board created a Snow Bowl budget team, a committee of seven men, to help sort through the finances of the municipally-run ski mountain and help shape a budget for the new fiscal year, July 1, 2016 to June 30, 2017.

The Snow Bowl budget team consisted of T.C. Bland as chairman, Paul Cavalli, Dennis McGuirk, Dave Nazaroff, Brian Robinson, and nonvoting members Chris Morong and Pete Orne.

After six weeks of work, the budget team sternly suggested municipal leadership to pay closer attention to the business of running its ski area, but the members voted 4 to 1 to support a $926,000 budget for the Camden Snow Bowl, as requested by then-Snow Bowl General Manager Landon Fake.

Chairman Bland dissented, and Morong, who was not a voting member, also opposed it. Before the vote, he wrote a stinging memo to the Select Board.

“While it is hoped that the Snow Bowl will break even or sometimes even make a profit, the Snow Bowl should be viewed as a cost center to the town,” he wrote. “We must keep in mind that the Snow Bowl is not Sunday River or Sugarloaf. While our trails have been widened, our snowmaking capabilities have expanded, and we've replaced the Big T with a Triple Chair, we are still the same small mountain on the coast of Maine that is susceptible to warm weather and rain.”

He requested the Select Board not approve the budget.

It did, however, and Fake entered the 2016 fiscal year (July 1) with the $926,000 budget.

Its work done, the ad hoc budget team dissolved.

But Morong dug in.

“I felt so strongly about the budget, and I told a few select board members then that I intended to keep on reviewing the numbers,” he said. “Because I did not agree with the budget that they passed in August.”

Morong wanted to know how much the town had spent so far on the mountain redevelopment — its gross project total expense — and if the Foundation had reimbursed the town with $4.5 million originally committed to.

On Sept. 13, Finnigan responded to an email from Morong, and told him that the Foundation had reimbursed the town $3.8 million, thus far.

She added that the town would be invoicing the Foundation for another payment in the fall.

With no more information forthcoming, Morong submitted on Oct. 28 requests for invoices and checks under the Freedom of Information Act. In his FOIA, Morong asked to see the total amount that Camden had spent on the redevelopment project since it was approved by voters in 2014.

He also asked for copies of invoices Camden had sent to the Ragged Mountain Foundation, and checks received. He asked for updated cost estimates for the proposed new lodge, and what it would cost to complete the redevelopment project.

The FOIA response

In between running the Mt. Battie Carwash, Morong figures he has spent more than 200 hours since April reviewing Snow Bowl financial statements, attending budget committee meetings, sending emails, preparing spreadsheets and questioning the redevelopment finances. He carries a 3-ring binder to hold all the documents.

In that binder are the documents he received Dec. 16, in response to his FOIA.

He learned that the project cost to date has been $6.8 million. He further learned that the Foundation had been invoiced for $3.84 million, leaving a discrepancy of $971,227.

While the town attorney has strongly advised against drawing conclusions from Morong’s calculations, Morong himself made clear that the current audit will ultimately determine the final amount of what was transferred from the town’s surplus.

On Dec. 30, Morong said he met with Select Board Chairman John French, Select Board member Leonard Lookner, Camden Town Attorney Bill Kelly, Town Manager Finnigan, and Frank Morong (Chris’ father, who had served on the Redevelopment Committee).

He armed himself for the meeting with three pages of questions, forewarning them all that the questions might be uncomfortable to answer, but that they needed to be addressed.

He asked, how much cash does the Foundation have on hand, and what amount of pledges does it hold.

In a summary of that meeting, which was not publicized, Morong said too many questions remain unanswered. Does the Foundation have the money to fund building a new lodge? What are the fines associated with the town’s environmental violation that resulted from run-off into Hosmer Pond from tree cutting on Ragged Mountain?

(There is a draft consent agreement that the Maine Department of Environmental Protection sent to the town’s attorney, and there is likely a fine attached to it. The DEP and Town Attorney Kelly are now negotiating that agreement, and both decline to talk about the details of it while it is in draft form.)

Morong is also asking, who is responsible for the project cost over-runs associated with the erosion control and DEP fines?

What next?

While Morong remains intent on getting answers to the Snow Bowl project, life at the mountain goes on. The chairlifts are running, ski programs are underway, Friday night community races are attracting all ages to the course; the terrain park is alive with skiers and boarders getting lots of air, and the constant comments continue to praise the quality of the snow and grooming.

Town Manager Finnigan resigned her job Jan. 18, citing differences of thought with the Select Board. On Jan. 26, Snow Bowl General Manager Fake resigned. He said in a prepared statement that day, “It has become apparent that I can no longer be effective in my job in the current environment of intensely differing views of the redevelopment and the character of the Snow Bowl's future.... There is yet work to be done, but the redevelopment project resulted in a gem of a small ski area the town can be very proud of.”

Town leaders decline to project into the future, and say they are waiting for the audit to conclude.

The Foundation has assured the public that it has the money to pay off the $4.5 million portion of project.

Bob Gordon said he will sit down with the town and work through the facts and the numbers.

“We are in good shape, from a fundraising perspective,” said Gordon. “We are far along, and will work with the town to complete the project.”

Camden Town Manager resigns (Jan. 18, 2017)

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• Camden, Rockland entrepreneurs told not to set up shop at Snow Bowl this weekend (Jan. 7, 2017)

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• Shaping the Camden Snow Bowl budget: Spend more to make more, or rein it in? (August 4 2016)

• Camden voters approve dipping into surplus to cover Snow Bowl's $297,303 deficit