Citizen asks Camden officials why numbers don't add up

Questions focus on payments for Camden Snow Bowl expansion
By Susan Mustapich | Feb 06, 2017
Photo by: Susan Mustapich Chris Morong, owner of Mount Battie Car Wash, and a former banker for 23 years, has asked questions about the town payments for the Snow Bowl redevelopment.

CAMDEN — A member of the 2016 Snow Bowl budget team has questioned the financial management and records of payments the town of Camden made for the multi-million dollar expansion of the ski area's trails, snow-making equipment, and lifts.

Last June, Chris Morong, member of the budget team, and a former banker for 23 years, started asking former Town Manager Pat Finnigan questions concerning the redevelopment of the ski area.

"I have experience in lending to businesses and reading financial statements," Morong said in a Jan. 3 interview." I actually did my own spreadsheets and analysis of the Snow Bowl back in April before they even formed a committee, because I was interested. There was talk out there of how much money the Snow Bowl was going to be losing. I wanted to look back historically, see the trends. See what happened. That's how I got started."

 

Snow Bowl budget team

On May 10, 2016, the Select Board appointed a short-term Snow Bowl budget team as one part of a strategy to avoid further financial losses at the ski area. Town officials were facing a two-season Snow Bowl operating loss of about $297,000, that coincided with the first two years of operation following the major expansion of the ski area. At June town meeting, voters authorized the transfer of funds from the town's undesignated fund balance to pay off the Snow Bowl's losses.

Members of the budget team were T. C. Bland, Paul Cavelli, Dennis McGuirk, Dave Nazaroff, and Brian Robinson, with alternates Chris Morong and Peter Orne. The committee was authorized to work until June 30, 2016.

The Select Board charged the team to: analyze actual and projected cost and revenues, work with existing Snow Bowl staff, identify essential expenses, consider opportunities for cost containment and revenue growth, and develop a balanced, break even budget that is based on an average winter.

The Snow Bowl is a town enterprise, intended to pay for its expenses with revenues from season passes, daily tickets, fees for ski lessons, vendor licenses, private donations, and the Toboggan Championship, the ski area's largest fundraiser. The Snow Bowl budget is separate from the town's municipal budget and is finalized in August each year.

The Snow Bowl's 2014-2015 season ended with a $81,213 deficit. Town officials cited a delayed opening for the shortfall. The Snow Bowl was closed during the December 2014 school vacation week, due to delays in completing the redevelopment. Town officials list revenues earned during December and February school vacations as essential milestones in a profitable season. The massive natural snowfall that winter did not close the revenue gap.

The 2015-2016 Snow Bowl expense budget was set at $947,464, with projected revenues of $967,489. The 2015-2016 season ended with a reported deficit of $216,303. Town officials cited warm winter temperatures, meager snowfall that affected all of New England, and snow-making equipment that made too fine a snow as factors in the short season and revenue loss.

Bland, who is controller for The First National bank, and Morong, were the sole dissenting members of the budget team. Both Bland and Morong wrote detailed memos to the Select Board explaining the need to cut operating expenses, and revenue projections.

Bland faulted town management for producing an inflated expense budget, and citing the redevelopment as the reason for increased expenses. In a July 26, 2016 memo, he asked why the expense budget increased nearly 35 percent, from $700,000 to $920,000, over four years. He strongly recommended that the Select Board “request a budget from management that reflects $850,000 of revenue, and that it include a projected surplus of $20,000 to $50,000, thereby cutting more than $100,000 from the expenses.”

Morong called for examining and cutting labor costs, and increasing revenues by reducing the number of free seasons passes given out to individuals and family members of employees and volunteers.

Morong faulted town officials and the majority opinion on the budget team for developing the expense budget and then figuring out how to make revenues match expenses. Morong wrote to the Select Board July 11, 2016, that the proposed 2017 Snow Bowl budget was created by “looking at what management wanted to spend and then making the revenue line items fit the expenditures. The exact opposite should take place.”

On July 12, 2016, the Select Board and budget team debated the issues raised by Bland. Morong did not attend the meeting. Selectman Marc Ratner was outspoken in favoring the lower expense budget recommended by Bland. On Aug. 2, the Select Board approved a 2017 Snow Bowl budget with expenses of $920,000 and projected revenues of $920,000.

While working on the Snow Bowl budget team, a discussion about payments for the redevelopment raised Morong's concerns. He started asking questions, then waited months for the answers.

Morong said he “finally had to resort to the freedom of information access request. I felt the information I was asking for should be readily available.”

Finnigan responded to Morong's FOAA request Dec. 16. Following two private Select Board meetings to discuss personnel matters, Finnigan resigned as town manager Jan. 20. Around the same time, the Select Board ordered a detailed audit of Snow Bowl redevelopment finances, due to be completed by Feb. 15.

On Feb. 3, Select Board Chairman John French cautioned against drawing any conclusions until the audit is completed.

Morong is also waiting for the audit results. He wants to make it clear that the numbers he has now are what Finnigan provided to him, and that an audit can turn up new information.

"The auditors have a job to do. The Select Board has a job to do. I think they're handling it well at this point," he said. "Hopefully, we'll have some sort of final resolution come middle of February."

Freedom of Information request

In the information request, Morong asked how much Camden has spent on the major redevelopment of the Snow Bowl.

"The project cost is $6,811,363, of which the town's share is $2 million, with the balance being funded by the Foundation,” Finnigan wrote Dec. 16.

Another question Morong asked in his information request was the amount the town had received from the Ragged Mountain Recreation Area Foundation. The Foundation had pledged to raise $4.5 million in private funds for the ski area redevelopment, with the remainder funded by a $2 million bond approved by Camden residents.

Morong had asked Finnigan that question before, during one of the meetings held by the Snow Bowl budget team.

“In the public budget team meeting in June 2016, I asked 'does the foundation owe the town any money?' And her [Finnigan] response was 'yes.' And I said how much, and she said $300,000. And I said, 'how come?' And she said, 'because I have not invoiced them.'”

He said that was the moment he became concerned about financial management processes. After that, he asked many more questions, but didn't get all the answers.

Finnigan's Dec. 16 response to the FOAA showed that the total amount requested from the Foundation between 2012 and 2016 was $3.8 million, and that the foundation had paid that amount to the town.

Foundation President Bob Gordon confirmed Feb. 3 that the foundation had paid all the invoices sent by the town of Camden, totaling $3.8 million.

For Morong, the numbers did not add up the way they should have. He believes that the $6,811,363 project, minus the $3,840,136 Foundation payment minus the $2 million bond, leaves $971,226 in payments that the town has made for the project, without asking for reimbursement of funds raised by Foundation. The $971,226 brings the Foundation's portion of the redevelopment funding to approximately $300,000 more than the $4.5 million originally pledged. In March 2015, the Foundation had agreed it would cover cost overruns on the redevelopment project, which had been announced at that time.

At the end of December, Morong met with French, Selectman Leonard Lookner, town attorney Bill Kelly and Finnigan to discuss his concerns about questionable financial management processes.

“As a result of my efforts, and bringing it to the attention of the Select Board, and the town attorney, the audit's being done,” Morong said.

Audit of Camden's payments for Snow Bowl redevelopment

The Select Board responded to Morong by voting Jan. 11 to audit the town's books regarding payments for the Snow Bowl redevelopment.

French has described the audit as a detailed analysis of the Snow Bowl redevelopment finances, from 2012 to 2016. On Feb. 3, he said it was a forensic audit, and involves matching up checks and invoices, and determining what accounts were used. He explained this takes time, and is very detailed. He said the audit may be completed sooner than Feb. 15. Once it is, French said, information will be presented to the public.

Gordon and the leadership of the Ragged Mountain Redevelopment Foundation are waiting for results of the audit as well. In the original plan, the $6.5 million raised through the partnership between the Foundation and the town of Camden would pay for the ski mountain's expansion of trails and beginner terrain, new ski lifts, snow-making equipment and construction of a new $2.9 million Snow Bowl lodge.  In March 2015, when it was revealed that redevelopment cost overruns were $1.2 million, the Foundation announced it would cover the cost overruns, and raise an additional $1.6 million for the lodge, estimated to cost $2.9 million.

Gordon said Jan. 3 that the fundraising for the additional money for the lodge has been going well, and is continuing.

He said when the audit is completed, and the town has confirmed its financials, the Foundation will meet with town officials. At that point, he said, the group will "assess where we are, and will continue to do what is best for the foundation and for the town."

Gordon indicated that once this had happened, information would be shared to update the public on the status of the Foundation's fundraising efforts.

Now that Morong has shared what he knows with town officials and the press, he, too, is waiting for the audit results.

"The number I've come up [$971,226] with is simply based upon the documentation that I received under FOAA that was provided to me by the former Town Manager Pat Finnigan," Morong said. "When you have an audit, it's fluid and things can change. When it's all said and done, I hope it's not as bad as it appears. Hopefully we'll have some kind of a final resolution come the middle of February.”

When asked why he has spent many hours looking into the town's payments for the Snow Bowl redevelopment, Morong said, "I was 5 years old when I started to ski. I burned up lots of mittens on the rope tow. I used to ski every weekend with my grandfather. My mom and dad also skied. I lived out there in my middle school years and my high school years and that's why.

"I brought my kids up skiing there and when the time comes that I have grandchildren, I want them to be able to ski there. I'm just deathly afraid that if things don't get under control with the finances of the Snow Bowl that then it would be closed. I don't want that to happen."

Courier Publications reporter Susan Mustapich can be reached at 236-8511 or by email at smustapich@villagesoup.com.

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