“The center deserves a second chance,” John Chambers said July 27. However, he warned, if they don’t stick to the annual budget released earlier in July, “they’re just not going to be here next year.”
“If they do what they did last year, they won’t make it,” said Chambers, a retired CPA and financial consultant. “They don’t really have a choice.”
Chambers reviewed his financial analysis of the Center of Anna Maria Island, an undertaking requested by Mayor Dan Murphy, for the city commission in a 45-minute presentation.
He said the review was not an audit, as that required too much detail and manpower for a single retiree to complete.
However, he said he had examined more than 1,000 pages of center financials for a broad scope, including credit card and bank statements, bank ledgers and tax returns.
Murphy informed the community center July 7 that the city would begin an audit of the center’s financial position amid concerns that the center had not met revenue needs for nine straight years.
Chambers volunteered his time to the city.
Murphy asked Chambers to examine the financial statements and present findings to the commission.
But a review of the same documents provided by the city to The Islander indicated not all credit card account statements were provided to the city, and other documents fell short of covering a comprehensive review.
Chambers told commissioners he had not been asked to sign a non-disclosure agreement, which the center board previously suggested it would require of anyone looking at its financials.
He also noted that center management and staff were cooperative in providing the requested documents.
The highlights
Chambers addressed a $100,000 note taken out in September 2015 for the value of exercise equipment in use at the center. “The note is problematic,” he said.
Although there was confusion among officials as to who holds the note, it is held by developer Shawn Kaleta, a former center board member.
Chambers said it is unclear to him whether the note is a donation or a debt. A copy of the signed note does not exist, but a county record filed by Kaleta acknowledges the debt.
“No interest was ever accrued or paid on this note,” he said. “If you thought it was a donation, you wouldn’t.”
However, Chambers said, the full amount of the note — a minimum $100,000 – is due in September according to the terms, which would “wipe out the center’s reserves, and it would be a gamechanger if they had to pay it.”
“It’s a risk that needs to be addressed at some point,” he said.
According to Kaleta’s lawyer, Bradenton attorney Louis Najmy, the use of the equipment for two years was Kaleta’s donation and the full value of the note — principle and interest — is due in September.
Chambers noted that there were no major changes to be made in the account ledgers, meaning documented entries were generally accurate.
He noted some minor errors that “went on for some time,” and said he delivered a set of recommendations to the center to improve control over spending.
He also said that based on his inquiries, the board was considering new policies and procedures to improve governance.
In addition, he said, petty cash transactions had been significantly better documented and limited in the latter half of the year. “I don’t think cash was flowing around nearly to the extent people thought,” he said.
Chambers noted $750 in late fees on credit card payments in the 2016-17 fiscal year and said the center had withdrawn $300,000 that year from its endowment fund to help cover the funding shortfall.
Chambers also said the center lost about $85,000 in grants, including one lost due to a lack of confidence in the center’s administration and financial situation and another lost because the center’s member base did not significantly include low-income children.
Chambers said center revenue has remained relatively flat since 2014, while expenses have risen.
Commissioner Carol Carter asked Chambers and the city to look into the center’s CrossFit program, which is owned and operated by Shay Coleman, rather than the center. The center has a substantial obligation to Coleman for monthly payments, according to a contract.
Looking to the future
Although the 2017-18 fiscal budget will allow the center to pull through the next year, Chambers said, by the time July 1, 2018, rolls around, the center will be in the same financial situation.
Chambers said that robust program development is less effective at improving finances than cutting costs, and the center needs to consider ways to cut expenses to improve financially.
However, he said, the strategy for the future budget for the center shows no significant improvement.
“They are making progress,” he said, but he urged more financial cuts.
“The city is not a philanthropic organization,” Chambers told the commission. “It’s not up to the city to prop the center.”
However, he said, “it behooves the city and residents for the center to succeed.”
Chambers recommended a representative of the city meet with someone monthly at the center to track any spending.
Commissioner Dale Woodland said he’d noticed how demographic changes over the past decade had negatively affected the center. “The city residents were philanthropic, and that’s what ran the community center,” he said.
David Zaccagnino, chair of the center board, said the review was “a wake-up call” for the center.
He said Chamber’s recommendations — made during the course of the financial analysis — were actively being implemented.
“We’re trying to make it better,” he said.