By Nicole Barde
VCTC Meeting summary and Op Ed. May 21 and June11, 2015 meetings
5 years of deficit spending has taken the general fund of the VCTC from over $650k in 2010 to a projected $485,250 by the end of 2016. The fund has been drained due to general expenses exceeding revenues over time. The ongoing deficit is due to hiring external professional help to assist with the creation and promotion of a variety of events, investing in a marketing and promotional strategy and lastly in buying real estate. It is hard to determine what real financial impact these activities have on VC commerce overall. More importantly there is no leadership coming from the County to do what is necessary to ensure that the V.C. economy gets stronger except to say that the “Tesla effect” will save the day.
The VCTC meets monthly. The meetings I attended were held May 21 , and June 11
In the May meeting Deny Dotson, Executive Director, presented the proposed 2015-2016 budget and it was approved. The proposed 2016 budget came in at a $45k deficit (expenses over revenues). Deny reviewed the VCTC general fund activity and didn’t think the deficit was a problem since he could continue to drawdown the general fund to cover it. Essentially, as long as we still have checks…we’re OK.
The VCTC has operated at a deficit for the last 5 years. Some of that deficit was covered by the County who paid for the salaries of the staff and other administrative expenses, now the deficit is covered by the VCTC general fund. Events are basically a breakeven proposition, and grants are less than 5% of the revenues in the 2016 budget. I hope that the rumored TRI hotel/ casinos and the brothels do very well because the room tax and tourism tax is what’s funding the VCTC and with more V.C. lodging venues for sale or closing these new TRI lodging venues will need to fund the VCTC thru their room taxes.
In the real world when your expenses continue to exceed your revenues for any length of time it is called a “going out of business scenario”. You have to examine all of your expenses and decide which are absolutely necessary and which are simply not affordable. You don’t buy real estate you can’t use (i.e. Black and Howell building/site for $80k++). You look for revenue generating activities to invest in. If the rate of drawdown on the VCTC general fund continues it will eventually disappear and I don’t know how Deny thinks he will build the VCTC general fund back up and by when.
Now, to be fair, you have to spend money to make money. I agree with the decision to acquire the fairgrounds venue, we’ve needed it for a long time and if, big IF, done right it should provide for an increased revenue stream for the VCTC. I also agree with the recently proposed “Cemetery Gin” project since it looks to be a small revenue stream for the VCTC in the future.
VCTC has also invested a lot in marketing and promotional activities. I agree that we needed a marketing strategy tied to concrete results which needs to be funded but I’ve never seen what the VCTC considers a goal oriented marketing strategy. All that gets presented in the VCTC meetings is activity but not the impact of the activity. I don’t recall seeing any real performance measures. Maybe I missed them.
Liquid Blue always does a summary of the past and future events. After expenses and their commission is taken out the VCTC really doesn’t make anything substantial off of the events and several are at a loss to the VCTC. Liquid Blue has as its objective to increase visitation to V.C. which means more and different types of events and that’s what they’re doing.
While I think both the arena and gin projects are appropriate capital expenses to tap the general fund for…..I don’t believe in tapping the fund to cover deficit spending on operating expenses and for real estate speculation. That’s just irresponsible management. After 5 years there should be no more blaming the deficit on a prior administration, on the recession, on trying new things and a learning curve. This is now squarely Deny’s organization and he’s accountable for the results or lack of them. Continued mistakes and unexpected expenses or lack of revenues should not be acceptable to the BOD of the VCTC.
As Executive Director, Deny has to be concerned with the viability of the VCTC as an organization so he needs to look for new revenue streams to keep his budget balanced. HIS budget. He’s not responsible for increasing revenues to V.C., just for HIS budget…..and that is appropriate.
While the events do bring people into town theVCTC says their job ends with that. The VCTC exists to expose V.C. to the outside world, make it a compelling place to visit and get people to visit. That’s it. No more, no less. Essentially the VCTC is doing exactly what it’s supposed to be doing. It may be debatable how well they are doing it but they are on track with what they are chartered to do.
Is that enough? For a Tourism Commission I’d say yes. To expect more is futile and a misplaced expectation. For a county I’d say no. This is where the County should LEAD and not just let things happen and blame the merchants for not getting their act together.
The VCTC general fund issues aside there is a bigger problem. The lack of a Development or Redevelopment District plan for VC is the problem. As of June 16th, and I asked, Pat Whitten says that there are no plans or interest in having one. The County has one for TRI why not for V.C.?
I think that it is very short sighted of the County to think that it can strengthen and grow the businesses in VC solely thru the efforts of the VCTC. It requires leadership not just a promotional and marketing implementation organization which is essentially what VCTC is.
If the VCTC had as their objective “increase sales and revenues for VC merchants and stakeholders” they might be doing different things, differently. But essentially their objective is “bring people to VC” which is an activity not an end result. The Tourism Tax receipts are reviewed in the VCTC meetings but mostly as a VCTC revenue indicator, not an impact indicator of their activities.
In my mind “Make V.C. a great place to live and do business for current and potential business owners, merchants and employees by strengthening its historic ties, its unique architecture, lifestyle and visitor experience” might be something to strive for….but that’s not for the VCTC to do…it’s for the County to lead. We need an Economic Re/Development Plan.
But then that would require an actual County wide strategy, and one not totally focused on TRI. I continually hear the Commissioners and Pat Whitten say that the “Tesla effect” is going to bring more money into the county for the merchants and everyone else. That is not a plan, that is not leadership it’s a strategy of hope, which is to say it’s no strategy at all.
So far the County looks at the cyclical economic woes of V.C. as a problem for the merchants to solve for themselves. This laissez faire attitude about the V.C. economy on the part of County is not a sign of a modern, proactive, effective, aggressive and business friendly environment, it’s a sign of an entrenched, fend for yourselves, slow to change, “it’s always been that way” establishment who cares more about the newcomer with lots of money than they do for the family who’s supported them all their lives. Either that or they don’t have the skills to do the job.
Ultimately the merchants are totally responsible for making money. They need to look at their own businesses and change, fix or add whatever it takes to increase their own sales. They need to tell the VCTC and the County EXACTLY what they need in terms of support, resources and visitors to make that money. Is it more shuttles to make more venues accessible to visitors? Stairs to make it easier for visitors to climb the streets? More attractions and family oriented venues to keep people in town for longer multi night stays? Specific winter venues and attractions to lengthen the season? Regardless of what the merchants tell the VCTC and County, it’s up to the County to provide the framework and the leadership to make it all happen.
One thought on “The VCTC Deficit budget was approved in the May 21st VCTC meeting. But don’t worry we still have checks! The real question is: Is the County serious or does it even care about strengthening and growing a vital and prosperous Virginia City economic zone?”