By CARL E. FEATHER - firstname.lastname@example.org
Commissioners want the State of Ohio to cap the Capital Renewals Reserve (R&R) on the Lodge and Conference Center at 7 percent, thereby allowing more revenue to reach the bottom line.
The R&R is a percentage of the lodge’s gross revenues the state requires Delaware North to aside for expensive rehabilitation projects at the lodge, such as replacing guest room furniture, information technology, parking lots or rebuilding pools. Per the county’s agreement with the Ohio Department of Natural Resources, the percentage of revenue diverted to the R&R gradually increases to keep pace with the anticipated maintenance and replacement needs of an aging facility. This year, 6 percent of the revenues go to R&R; in 2014, that increases to 7 percent.
Claypool told the board in a work session on Tuesday that he feels the 13 percent the state wants the R&R to eventually top out at is too high, especially if lodge revenues grow as projected.
An analysis of the fund for the years 2012 to 2025 shows that holding the R&R at 7 percent would be adequate to meet the capital projects needs of the lodge while maintaining a cash cushion of about $600,000 for any unexpected repairs.
The analysis assumes annual spending of about $500,000 on lodge projects. For example, in 2013, the plan is to spend $50,000 on emergency repairs, $35,000 on information technology, $100,000 on room updates and $140,000 on other projects.
By 2020 the breakdown changes to $120,000 for emergencies, $40,000 for information technology, $100,000 on room updates and $190,000 on other projects.
Also in that year, the lodge is projected to have revenues of $6.8 million and a R&R fund balance of $579,232.
The commissioners, who have already met with the Ohio Department of Natural Resources on the matter, plan to send a letter to the department and outline their plan for managing the R&R at a lower cap.
Commissioner Joe Moroski said that if the “perfect storm” of repairs hits the lodge in one year, the board would have the flexibility to temporarily demand a larger cut of the revenues for R&R. “We can change it at any time,” he said.
“This gives the county the ability to make that change rather than the state require it,” Claypool said.
Moroski raised the issue of the structure’s huge roof area and noted that the R&R fund, even at $500,000, would be insufficient to cover a project of that magnitude. It’s not a matter of if, but when.
“We’re almost 10 years into that building and we’ll have roof issues,” he said.
County Administrator Janet Discher said a project of that magnitude would probably require a bond that the board would have to pay off over a number of years.
The analysis prepared for the board by the lodge management team forecasts $7.3 million in gross lodge revenues by 2025. By holding the R&R’s slice to 7 percent, the board will, hopefully, see more of that revenue growth come back to the county for debt reduction.
In 2012 the lodge made an operating profit of just more than $200,000 on $5.7 million in revenue (prior to R&R). That profit figure was the best yet for the county-owned facility at Geneva-on-the-Lake.