The board can expect to receive more revenue from parking receipts and interest income than from the operating proceeds of the 745 events projected to take place over the next fiscal year at
, DeVos Performance Hall, and Van Andel Arena. Way more.
According to a draft of the CAA’s 2007 annual budget, the board should receive $554,219 in operating revenue from the buildings for the year. But the CAA can expect to get $1.67 million in parking revenue and interest income over the same period. That figure is nearly $1.12 million more than the operational revenue and three times the building income.
Parking receipts are expected to yield $889,166. Most of that revenue, $734,565, should come from the ramp located below the convention center. Parking activity has picked up there tremendously over the past year and total ramp receipts in the upcoming year should top the amount recorded two years ago by $150,000. Another $154,601 in parking revenue should come to the CAA from spaces near the arena.
Interest income should deliver $785,000 to the board next year, a dramatic revenue leap from the $67,425 the CAA received in 2005. That huge expected gain is due to higher short-term interest rates and a larger amount of investments than the board had two years ago.
construction project ended well below budget, $15 million from that fund was transferred to the CAA and invested by the board. So the interest income the board expects to receive next year has been calculated on an investment of $18 million at a rate of 4.35 percent, which is roughly four times the return two years ago.
The higher expected returns on investments and parking have been projected to continue and to help wipe out a capital improvements deficit. Instead of the $1.15 million shortfall in 2016 that was projected in a 10-year forecast issued last year, the board this week will find an account surplus of $5.26 million in its place for that year.
And the 10-year capital outlay outlook — with $16 million worth of projects — listed in last year’s forecast remains intact on the new forecast.
But that outlay could change. The board will also see on Wednesday a request for capital improvements totaling $588,500 for the upcoming fiscal year, with $515,000 of that total being requested for the 10-year-old arena. A new indoor football field for $190,000 and a $225,000 replacement matrix for the video board are the most expensive items listed.
The long-term forecast issued last year had the CAA spending $400,000 on improvement projects. But this week’s capital request easily tops last year’s projected spending. If board members approve the request, then the CAA will spend more on improvements in FY07.
Still, Kent County Fiscal Services Director Robert White told the Finance Committee last week that the CAA should be able to sustain operating and capital reserves in the long term.
White also said that DeVos Place parking revenue could rise higher than the projected amount because the SMG forecast has 100,000 more people visiting the building in the new fiscal year than will do so by the end of this year. SMG manages the daily operations of the convention center and arena and performs the fiscal projections for both buildings.
But despite the good revenue news that board members will receive this week, they will also learn that their expenses will be higher than their income next year.
“The CAA will be spending more in FY07 than it will be taking in,” said White, who worked with CAA Administrator Sue Waddell on the board’s budget forecast.
Total revenues for the year are expected to be $4.68 million, while total expenditures are forecast at $6.3 million. Those figures leave the board with a projected deficit of just under $1.62 million, a shortfall that will be filled by the CAA operating reserve.
The CAA is expected to adopt the annual budget next month. The new fiscal year begins on July 1.