City issues Request for Proposal for private McDermont management
By Paul Myers @PaulM_SGN
LINDSAY – Lindsay has made some strides to get their financial house in order as of late. Just last week the Sun-Gazette reported on resolutions aimed at putting the city’s books in a more realistic position. In a staff report presented by Lindsay finance director Bret Harmon, he noted that the City’s general fund will be facing a $12 million hole with the removal of McDermont as an asset. And now the City is continuing down the road to fiscal sustainability by issuing a Request for Proposal (RFP) for sports complex management services.
According to the RFP the City is looking for a sports complex management services provider to privatize the operations and management of McDermont.
“Currently the Complex provides recreational services to not only Lindsay residents and school children, but also to visitors…sports leagues, sports camps, special events and concerts from across the Central Valley and California,” the RFP stated.
The RFP went on to state that the service company chosen would take over all management and operational responsibilities and duties for McDermont including all direct and indirect costs, staffing, financial management, maintenance, repairs, applicable taxes and business license.
Currently all of those responsibilities fall upon the City and 27 employees plus Clint Ashcraft who currently runs both McDermont and the Wellness Center.
The RFP noted as well that the City is willing to, but is not forcing, a public-private partnership for a short period of time, presumably for a smooth transition from one managing service to the other.
Looking for a management service to McDermont comes with little surprise given that the complex is no longer considered an asset to the City. Early last month the City passed Resolution 17-43 that forgave the $13.4 million lent by the general fund to the construction of McDermont and retroactively accounted for the transfer of $3.8 million in borrowed funds for McDermont operations over the years since it was created.
The adjoining staff report for Resolution 17-43 noted that during a 2010 audit conducted by Brown Armstrong Certified Public Accountants, the City’s auditing firm at the time, the City was instructed to record a $13,476,016 advance from the general fund to McDermont to account for the funds used to build the McDermont Field House. The expectation at the time was that McDermont’s revenue would pay back the advance from the general fund. However, as years have gone on the City has not seen a return on investment and it may never, according to Harmon.
“There is not a reasonable expectation McDermont will be able to repay this advance…the City should not continue to carry the advance on the general fund balance sheet as an asset,” Harmon wrote in a staff report for the meeting.
The RFP comes in the same year the City laid off four McDermont employees which saved the City $440,000 for fiscal year 2017-2018 while creating a balanced general fund and wellness center fund.