We can’t wait to say “good riddance” to the contract defining the relationships between Coffee County, Manchester City and the Public Building Authority (PBA), the authority that owns and operates the Manchester-Coffee County Conference Center. While this agreement needs to be eliminated, the conference center must continue to operate because the facility’s benefits outweigh the costs.
Some may be eager to close the doors of the center when the contract expires in 2021, but while their frustration related to the conference center is understandable, it is not a reason to discontinue operations at the center, which offers a valuable service, provides a venue for businesses and industries to hold meetings, brings visitors to Coffee County and boosts sales tax and hotel tax revenues.
Center needs to live within its means with oversight
The problem with the center lies with the two agreements outlining the relationships between the county, the city and the PBA. The first is Loan Agreement Z-4-A and the second is the operating agreement between the two entities signed in 2000. Loan Agreement Z-4-A, updated in November 2006, involves repayment of the original bond and cannot be changed or amended before the bond is completely paid. The bond is set to be paid off in 2021. Payments on the bond issue as well as operating losses are split 50/50 between Coffee County and Manchester City.
The issue with the operating agreement between Coffee County and Manchester City is the two entities are obligated to pay for expenses of the conference center, but they have no oversight over it.
Would you sign a document obligating you to pay for the costs of a venture, which may be profitable or run a deficit, if you had no control over operations, if you weren’t eligible to see detailed annual budgets, and if you didn’t have authority to hire or fire? Would you enter into an agreement which would make you liable if you refused to cover operating costs associated with the venture and you had no alternative route to avoid those obligations and renegotiate that contract?
This is exactly the type of agreement Coffee County and Manchester City entered 20 years ago. But once the bond is paid, the contract between the two entities can be altered.
Coffee County, Manchester City and the PBA have already launched the process to start evaluating options for a new agreement, attempting to be proactive rather than wait until the bonds are paid off in 2021. A new committee – called the PBA Contract Negotiation Committee – was established in March.
This committee, along with Coffee County and Manchester City officials, must eliminate the problem.
The problem is not the conference center, which provides a necessary service, but the contract.
With such a flawed deal, which didn’t ensure oversight, matters were destined to turn sour as soon as someone was willing to take advantage of the situation. Former manager Alyce Heifner stole $31,000 from the conference center over a span of 15 months, according to the Tennessee Comptroller of the Treasury. Heifner resigned in 2015 after approximately a year and five months on the job. The issue is not management per se, however, but the contract, which created a situation that allowed Heifner to embezzle money.
PBA members may seem arrogant when they demand the county pays for the center’s costs, even when losses exceed the expected deficit. But remember, the document outlining those relationships tells PBA members that this is their prerogative. The contract created the problem, not the PBA. PBA members have tried to provide guidance to management and to make decisions that would improve the building and bring more customers to the center.
The issue does not stem from the Coffee County Commission. Commissioners, while arguing PBA should present a detailed budget for approval, admit the center is an asset to the community.
The trouble began with the contract. That document laid a foundation for a troublesome future, provided no protection for the county and the city (or taxpayers).
Not only is the contract unfair but it is confusing. I have covered the county through two commissions, and I have yet to meet a county official who understands the terms of the contract.
Coffee County Attorney Robert Huskey has made numerous attempts to interpret and explain the document to commissioners and to the mayor. But despite his best efforts to articulate clearly, county officials have failed to understand the contract and questions remain and constantly reappear – not because the attorney lacks qualifications or because commissioners lack comprehension skills, but because of the vague and unclear language of the contract.
The contract has led to tense relationships between county, city and PBA.
Even in years when PBA members have presented budgets to the county, they have exceeded the expected deficit. Going over budget has become the norm. But the county couldn’t do anything about that, other than to express frustration. At the end of the fiscal year, the county has no option but to pay.
The contract has made county officials feel handicapped because they have no say in how the budget will be created or how money at the center will be spent. The PBA is not even required to present a budget to the county or city.
That leads to the frustration not only of county commissioners but of department heads and employees of county departments. Departments are required to present a budget, and if the county commission wants to cut expenses – as it often happens – the departments mush comply. So, when department heads are told they can’t boost the paycheck of their employees, who are paid less compared to surrounding counties, this sometimes leaves county departments irritated. Why do they have to obey, and the PBA doesn’t, when the money covering all those costs come from the same source: the taxpayers.
Over the years, when the center has operated over budget, Manchester City has not showed the same level of dissatisfaction toward the PBA as the county has. According to county officials, the reason for this acceptance is the fact that Manchester sees the bulk of the hotel tax revenues brought by the center. The option of Manchester City covering more than 50% must be explored.
County officials and community members want accountability and transparency, and the new contract must ensure that, so the center can continue to welcome visitors, even if it never breaks even.
Is breaking even possible?
Does the benefit exceed the cost? Yes. That’s why the center must continue to operate.
This fiscal year – with several months without holding events due to the pandemic – the deficit is expected to near $400,000. In FY15, operating losses were $301,329. In FY16, they were $407,178. During FY17, the conference center suffered a loss of $505,975. FY18 saw an operating loss of $396,000. It suffered loss of nearly $340,000 in FY19.
While Rebecca French, currently serving as manager, has poured her heart and soul into improving the center, she couldn’t eliminate operating losses.
But is it possible to run the center without a deficit? And what is better: cutting costs, even if that means limiting events and letting the building deteriorate, or maintaining the facility and focusing on bringing more visitors, events and industries to Coffee County?
While $300,000 or $400,000 may seem a substantial deficit, the value the center brings outweighs the expense. The center employs dozens of locals. An MTSU study- while it has been questioned – shows the benefits related to tax revenue surpass the costs. According to the study, the center contributed approximately $4.7 million in business revenue to the county in 2016. Even if that number is inflated, the returns certainly exceed the investment. Again, the question is not if the center should operate, the question is how. And the answer is: it should operate with accountability and transparency, which the new contract must ensure.
Instead of seeing the conference center as a business, you can consider it as a facility improving the lifestyle and opportunities of Coffee County residents – just like the libraries and the recreation center do – and they are funded by local taxpayers. The difference is that the libraries and the recreation center must answer to county and city officials, while PBA members don’t, and that infuriates locals more than the fact that they have to financially support the facility.
That’s why the new contract must lay a foundation for better relationships that would lead to successful operations at the center, which will ensure a flourishing community.