EDMONDS — In two recent reports, the state Auditor’s Office has found the Edmonds Center for the Arts is making progress on its financial issues, but in a separate report questioned the lack of bidding on some Port of Edmonds projects.
The comments came in management letters from the state Auditor’s Office, which reviews the finances and the performance of government agencies.
The Edmonds Center for the Arts has taken steps to improve its balance sheet, the report found. These include increasing general operations revenues, which totaled $2.1 million last year; increasing the prices of concessions and tickets; and hiring staff to bring in more revenue.
The center continues to borrow from the city of Edmonds to make its bond payments, although the amount it has borrowed has decreased from $333,524 in 2012 to $125,000 last year, according to the report.
The reason for the borrowing dates back to 2008, when the center estimated it would receive $200,000 per year in sales tax revenue rebates. The money would be used to help pay off the bonds used for renovating the theater, said Joseph McIalwain, executive director.
When the recession hit soon after the bond deal was final, the sales tax revenue “fell to zero,” he said.
The arts center is operated by the Edmonds Public Facilities District, which receives a rebate of .033 percent of local sales tax revenues.
Prior to the bond sale, the city of Edmonds had essentially co-signed the deal, agreeing to provide a loan if the arts center couldn’t make its payments. Ever since then, the arts center has had to borrow money from the city each year to meet its bond payments, McIalwain said.
The arts center now owes the city slightly more than $1 million for the loans. It’s receiving about $65,000 annually in rebated sales tax revenue, McIalwain said. The arts center hopes to reduce the amount of the loan from the city this year to below $100,000, he said.
The arts center will have an opportunity to refinance the bonds in 2018. The city will be repaid for its loans plus interest, he said.
If sales tax revenues continue to come in as projected, the arts center may be able to stop taking loans from the city in 2019, McIalwain said.
Last year, some 60,000 people attended events at the Edmonds Center for the Arts. A recent auction generated $370,000 in donations.
The Edmonds Public Facilities District is one of 28 public facilities districts statewide. Other public facility districts in Snohomish County receiving a rebate on sales tax revenues include the Lynnwood Convention Center, Everett’s Xfinity Arena, and the Institute of Flight at Paine Field, he said.
In a brief report on the Port of Edmonds, the auditor’s office looked at 12 repair projects in the 2015 and 2016 fiscal years totaling $88,433.
Six were nonroutine and required competitive bidding, the report said. Repair of a hydraulic lift was performed by a contracted vendor, work that was outside the scope of the contract, according to the report.
The auditor’s report noticed “a few circumstances that didn’t follow the exact letter of the public works contract regulations,” said Bob McChesney, the port’s executive director. “We’re taking actions to rectify that situation.”
There aren’t many companies willing to bid on some projects, such as repair of the hydraulic lift, he said.
Sharon Salyer: 425-339-3486; salyer@heraldnet.com.
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