GRAND FORKS, N.D. - VenuWorks, the firm that runs the Alerus Center, will likely repay the city some of the money the city says the firm owes, though that's not how the firm is characterizing it.
"Contractually, we're adamant we don't owe the city anything," President Steve Peters said. "Politically, we understand that in these economic times, things are tough. We're willing to explore ways we can reduce our fees over the next five years to help with that."
City Council members put the pressure on Peters at a finance committee meeting Wednesday, arguing that the firm should never have collected $175,000 in management fees for 2008 when the city-owned events center lost $481,000.
The Alerus Center is the biggest facility that Ames, Iowa-based VenuWorks manages. The firm will also manage the Bemidji Regional Event Center when that opens in October 2010.
Peters agreed that, in principle, the firm and the city could work out an arrangement where VenuWorks would cut its fees. Neither side would likely admit that it is wrong, but the city would make up some of what it thinks VenuWorks owed it and VenuWorks wouldn't have to pay the full $175,000.
The 2007-09 contract between the city and VenuWorks says the firm will subtract from its fees whatever the events center loses. From the city's perspective, that would seem to imply that VenuWorks owes the city a $175,000 reimbursement.
Peters argues that the losses all came out of the fund the council gave to the commission to take risks on concerts. That concert fund has always been considered separate from the rest of the Alerus Center operations, he said, which means it doesn't count against the management fees.
City Attorney Howard Swanson said none of that is in the contract. The contract simply says losses will be paid out of the management fee, he said.
Peters said it doesn't have to be in the contract because the commission had long ago determined that the events fund is outside the contract. It's what he calls "past practice."
The Alerus Center contract is a legal maze as far as management fees are concerned. The 2007-09 contract is based on the 2004-06 contract, which was in force before the concert fund was approved in fall 2004.
The argument from VenuWorks is if the concert fund doesn't have any bearing on the 2004-06 contract, it shouldn't have any bearing on subsequent contracts based on the 2004-06 contract.
The argument from the city is that a loss is a loss.
It's clear from commission minutes that the commission never intended for VenuWorks to bear the risk of concerts, though that decision was not made by the full body until March 2009, months after the losses incurred in 2008. An executive committee of three commissioners, meeting unannounced, made the decision in March 2008.
Swanson said such decisions aren't part of the contract unless both parties signed on it. Merely voting on it isn't enough.
Tu-Uyen Tran is a staff writer for the Grand Forks Herald. The Herald and the Bemidji Pioneer are both owned by Forum Communications Co.