Enid City Commission members took a tough bite to swallow last week upon voting to cover a larger-than-expected revenue shortfall at Stride Bank Center, after city officials said the event center had faced another difficult year of operations.
In their penultimate regular meeting of the 2022 fiscal year, city commissioners on Tuesday unanimously agreed to transfer an additional $500,000 from the city’s general fund to cover a projected deficit in the event center and Convention Hall fund.
Commissioners also approved transferring nearly $200,000 more to the downtown hotel under the first full year of its five-year minimum occupancy guarantee agreement.
While the city had budgeted a $420,000 deficit for the event center fund this fiscal year, event center’s management had told commissioners they’d projected a $742,000 hole during last month’s FY 2022-23 budget talks.
“This is a disturbing number,” Ward 5 Commissioner Rob Stallings said. “Nobody makes money off these things. And that’s the hard part for me to eat — to take a bite out of that apple — that we’re gonna lose $500,000 a year.”
The Stride Bank Center this year had lower-than-projected rental and event revenue with fixed expenditures, said Keller Taylor, regional vice president of the Oak View Group, which oversees the center’s management company.
Taylor had said Stride Bank Center’s shows had been canceled or had underperformed this year, along with a reduction in holiday and meeting schedules.
While the event center projected needing just over $300,000 more, city of Enid CFO Erin Crawford said Tuesday the city hadn’t received final numbers since December and had asked for up to $500,000 to spend only if necessary.
“I’m not comfortable with the large swings that I see in things from month to month and when I go in look at their history … knowing I may not know for several months the final numbers,” Crawford said. “I don’t know all the shows and all the bookings they have, because I don’t have that level of detail into their financials, so I feel comfortable that the $500,000 number would be adequate.”
Crawford said next fiscal year, Stride Bank Center is projecting a $550,000 operating deficit, which the city regularly covers through its event center and Convention Hall fund.
The event center now has a new general manager, City Manager Jerald Gilbert said, adding that he intends to visit with him and Taylor in August and update commissioners quarterly.
Taylor, the center’s former general manager, had said the tour and performance industry hadn’t rebounded like management had hoped after COVID-19.
Last year, the event center also lost revenue from larger events such as concerts or other shows that were postponed or outright canceled due to COVID concerns.
“We need to get closer to break-even,” Gilbert said. “There may not be good reasons, but they’re valid reasons from the perspective of the industry.”
The Enid Economic Development Authority also was transferred an additional $307,000 — more the half of which added more funds to the downtown hotel’s room rate guarantee with the city, which now totaled $487,000 this year, according to the city.
An initial $300,000 had been budgeted to cover the Best Western Glo’s 40% annual minimum occupancy rate, but city staff had calculated another $187,000 was needed to comply with the agreement signed in 2018, Crawford said.
“The hotel deal just adds injury to insult to this whole thing,” Ward 6 Commissioner Scott Orr said.
In May, the hotel was at an occupancy rate of 45%, the highest it’d been since the hotel opened in April last year, Gilbert said.
The city will pay the percentage profit difference between the minimum rate and actual yearly rate if management does not have more than 14,906 rooms occupied a year, capped at $1,681,920 per year, on a maximum $120 average daily rate.
Gilbert pointed out if next year’s occupancy rate is over 40%, the city would be able to draw back part or all the money paid the year before.
Tuesday’s fund balance increases were among several end-of-year transfers out of the city’s general fund balance, totaling $3.3 million.
Funds were available because sales tax revenue for the general fund this year had been about 9% higher than budgeted, Crawford said.