Mac management promises changes in wake of audit

Thursday, February 16, 2017 - 14:30

After a 2016 municipal audit revealed a variety of accounting and management problems at the Harry J. McDonald Memorial Center, the nonprofit contracted to run the Eagle River recreational facility is considering a slew of operational changes, including reduced hours, expanded program offerings and increased user fees.

General manager Reid McDonald introduced the plan before an Anchorage Assembly committee Friday — the latest in a string of meetings held in response to last year’s audit.

Owned by the Municipality of Anchorage, “the Mac” has long been managed by Fire Lake Arena Management Incorporated (FLAMI), a nonprofit formed specifically for that purpose. The critical September audit report was “a wake-up call,” said Pat McCormick, president of the five-member FLAMI board of directors. Now, following months of discussions between board members, assembly members, city auditors and legal staff, the assembly is poised to continue FLAMI’s McDonald Center management contract, albeit with slight changes and increased oversight.

“I think it’s a good thing the audit came out,” McDonald told assembly members Friday. “Obviously it makes us focus and take a hard look at our budget; take a hard look at our marketing and see what we can do better.”

Son of the center’s late namesake, McDonald has been general manager at the facility for nearly 20 years.

The audit detailed pages of problems: In 2013 and 2015, center management did not remit profits to the city. There was a missing inventory, late payments and purchases made without city approval.

In a Feb. 10 memorandum to the assembly audit committee, internal audit director Michael Chadwick listed the steps taken since the release of the McDonald Center report. An inventory was completed in November. In January, the general manager delivered a check remitting the absent profits back to the municipality. While reserve account payments have continued to come late, the center has hired an accountant to help correct the problem, according to city auditors. An Internal Audit review of the center’s 2016 expenditures “did not identify any unusual transactions.”

Many of the issues identified by the audit trace back to recent budget trouble: Skating rink rentals are at an “all-time low,” McDonald said, and the center’s turf field hasn’t generated as much use as expected. Changes to some area soccer team schedules left the field a “ghost town” at the end of last year, he said.

The center incurred a deficit in 2016, which triggered an assembly review of the management contract, according to the municipality.

To balance the budget with increased revenues, the general manager proposed offering a new holiday 3-on-3 hockey tournament and adult winter hockey league, more youth skating classes and discounted rental rates outside of peak hours. The center plans on installing netting to enable batting on the indoor field, and introducing new activities, including a game known as “archery tag.” McDonald said he also plans on raising fees for things like skate sharpening, trimming operating hours and staff wages and modifying the center’s rental return policy.

There would also be regular checks to ensure the center remained in compliance with the terms of the management contract, board members said.

The plan garnered praise from local lawmakers and city officials alike.

Assemblywoman Amy Demboski, who described herself as one of management’s harshest critics after the audit findings, said she will now support continuing the management contract at Tuesday’s assembly meeting.

“This has given me the comfort to say, ‘You know, we should give them another year and give them an opportunity to prove they can do what they say they’re gonna do, because I think they can,’” Demboski said Friday. “I’ve been very impressed by the response and the proactive engagement by the Parks and Rec Board and the FLAMI board.”

Anchorage Parks and Rec director John Rodda called the new plan “a win-win for everybody.” Brian Fay, of the Eagle River Community Council, said he was confident in center management going forward.

“I’m extremely pleased with the progress that’s been made,” he told assembly members Friday.

To McCormick, the FLAMI board president, the otherwise negative audit report yielded positive results: increased communication between managers and a necessary budgetary overhaul.

“Because of that, my sense is that we’re much stronger going forward,” he told assembly members Friday.

A resolution and a memorandum introduced by Eagle River assemblyman Bill Starr further outline a path forward: a renewed FLAMI contract, monthly contract compliance reports, expanding the FLAMI board of directors from five to seven members and establishing an official marketing and cost control plan. While municipal purchasing guidelines often call for a competitive bid process, Starr said he would continue to support FLAMI’s sole-source contract to manage the McDonald Center, pointing to the board’s deep community ties and decades-long history of operating the facility.

“The unique reason for sole-source is because of that — the passion, the energy we have in a local board,” said Starr, whose assembly term ends in April. “I’ll go on record today: Yeah, I’ll fight for it Tuesday night.”