City responds to questions about X's lease
Posted: Saturday, January 27, 2007
Copyright 2007 Sioux City Journal By Lynn Zerschling Journal staff writer
Sioux City officials said the city has not attempted to collect additional money owed by the Explorer's baseball club until the contract with the club owners is amended.
"Staff feels the amendment is needed to appropriately respond to the state auditor and will be sharing the proposed amendment and supporting documentation in our latest response," Bob Padmore, finance and administrative services director, said in a letter to the City Council that will be presented at Monday's council meeting.
That information was included in a 40-page report to Susan Battani, director in the financial audit division in Des Moines. She has been in contact with the city since April seeking information on the X's lease after Rudy Salem asked for a state probe. This report, dated, Thursday, is the latest in the city's answers to the state's questions.
"Due to staff billing errors, the Explorers did not receive the request for payment for the July 1, 2006, payment," the report said. "An invoice has now been generated and sent to the Explorers requesting immediate payment."
In her latest letter dated Jan. 24 to City Manager Paul Eckert, Battani asked the following questions, followed by the responses from Padmore and the finance staff:
Battani: Provide an accounting of the amount due, received, forgiven and expended under terms of the original and amended leases.
Answer: The debt of $44,000 has been reduced by a payment of $4,561.70, which was received Dec. 13, 2005. The payment on July 1, 2006, still needs to be paid.
Battani: Has the city requested or received audited financial statements of revenues from the club? Provide documentation.
Answer: The report included financial statements the city has received.
However, in a letter dated Wednesday, Eckert wrote to John Roost, identified as the primary owner of the Explorers, "We are requesting a copy of your audited financial statements, including the audit opinion, for the years 2005 and 2006, as per Section 2 of your current lease with the city."
Battani: Has the city received and/or taken any action to collect the revenue due the city and if so provide documentation?
Answer: Following City Council approval of the revised lease on Dec. 19, 2005, the X's attorney discovered an error. The council has postponed acting to correct that clerical error several times, as recent as last Monday.
The lease should have said that the club should pay the city "5 percent of all gross receipts exceeding $1,205,000 in any calendar year. Payment shall be due 30 days after the last day of the month in which the last baseball game has been played if the minimum of $1,205,000 in gross receipts has been received."
The wrong figure of $205,000 was used instead of $1,205,000.
In the report, the city stated, "Due to the uncertainty of what the proper amount owing was, city staff has yet to bill the Sioux City Explorers Baseball Club for any rental due and owing under Section 2. Due to the uncertainty of what the proper amount owing was, city staff has yet to bill the club for any rental due and owing under Section 2."
Battani: Provide a copy of the city's policy and council minutes approving the use and disposition of the eight season tickets for employee recognition.
According to Williams & Co., the city's auditing firm, the Employee Advisory Committee and Eckert gave the tickets to workers as incentives for employee recognition. No list of names of those going to the games was included in the report.
"No formal policy was established for the disbursement of the tickets. Staff is drafting an administrative policy for the disposition of the tickets. A logging of the use of these tickets is being implemented immediately," the city replied.
Battani: Provide documentation on why City Councilman Marty Dougherty abstained from voting on the lease and provide an explanation of Dougherty's relationship with the Explorers and the city.
Answer: Dougherty, who went off the council a year ago, abstained from any votes relating to the X's due "to a perceived conflict of interest ... due to the fact that he is an in-law to one of the minority shareholders of the team. His brother-in-law is Shennen Salzman and he has a 1.0673 percent interest" in the Explorers.
City officials said they understood that some ownership of the team has changed since Dougherty voted on the revised lease.
Battani told the Journal Tuesday she asked Williams & Co. to provide additional information on the lease.
According to the CPA's firm letter, Battani said, "Based on their conservative calculations, the city should have collected $17,376 for the period Jan. 1, 2005, through Dec. 31, 2005, and $18,701 for the period Jan. 1, 2006, through Sept. 27, 2006 (the most recent date financial information was available to the CPA firm during audit fieldwork.)
According to the firm, the club "had not made any payments to the city."
Padmore said, "With the exception of the issue regarding the existing lease and payment due under that lease, staff feels that our responses will address all issues brought forth by the state auditor."
Lynn Zerschling may be reached at (712) 293-4202 or lynnzerschling@siouxcityjournal.com
Lewis and Clark Report
Date Action
11/16/92 First lease agreement signed.
Rent of $7,500 for the four months of season.
Parking: 50 cents each car in VIP area.
5 percent of net attendance receipts years 1-3;
7.5 percent of net attendance receipts in fourth year;
10 percent of net attendance receipts in fifth and future years
6/8/93 Skybox sublease to club at $5,000 for 1993, 1994, 1995
6/15/98 Revision of lease: $23,000 for use of stadium parking annual payment;
5 percent of gross sales fee on concession/novelty sales
Rent $8,300 for the four months of season
Another $200 a month added each year
Net attendance receipts 7.5 percent
2/7/00 Changed parking agreement to $1 per vehicle
5/2/01 Gas/electric meter put in X's name during season
11/15/01 Skybox charges forgiven; no longer charged
3/13/03 $61,000 loan to X's for concession equipment
10/13/03 Sent loan default letter
11/24/03 $8,287 received for equipment loan payment
6/15/04 $7,901.07 received for adjusted equipment loan payment
8/17/04 Lease payment delinquency letter sent
10/12/04 Lease and utility payment delinquency letter sent
6/26/05 $7,901.07 received for equipment loan payment
12/13/05 $4,561.70 promissory note payment received
12/19/05 New lease signed
X's to pay 5 percent of gross after $1.2 million
5/11/06 $7,901.07 equipment loan payment received
Lease Payments*
Year Ballpark Skybox Parking Adjusted Total Balance
1999 $34,000 $20,000 $28,750 0 $82,750 --
2000 $34,800 $20,000 0 0 $54,800 --
2001 $34,800 $20,000 0 ($13,700) $41,100 --
2002 $35,600 0 0 0 $35,600 --
2003 $36,400 0 0 0 $36,400 $36,400
2004 $37,200 0 0 0 $56,999 $93,399
2005 $38,000 0 0 ($131,399) $38,000 $131,399
Note In 2004, MidAmerican Energy bill owed for season was $19,799.
Charge adjustment of $131,399 is to comply with retroactive terms of Dec. 19, 2005, lease.
*From city finance department report
Sioux City officials said the city has not attempted to collect additional money owed by the Explorer's baseball club until the contract with the club owners is amended.
"Staff feels the amendment is needed to appropriately respond to the state auditor and will be sharing the proposed amendment and supporting documentation in our latest response," Bob Padmore, finance and administrative services director, said in a letter to the City Council that will be presented at Monday's council meeting.
That information was included in a 40-page report to Susan Battani, director in the financial audit division in Des Moines. She has been in contact with the city since April seeking information on the X's lease after Rudy Salem asked for a state probe. This report, dated, Thursday, is the latest in the city's answers to the state's questions.
"Due to staff billing errors, the Explorers did not receive the request for payment for the July 1, 2006, payment," the report said. "An invoice has now been generated and sent to the Explorers requesting immediate payment."
In her latest letter dated Jan. 24 to City Manager Paul Eckert, Battani asked the following questions, followed by the responses from Padmore and the finance staff:
Battani: Provide an accounting of the amount due, received, forgiven and expended under terms of the original and amended leases.
Answer: The debt of $44,000 has been reduced by a payment of $4,561.70, which was received Dec. 13, 2005. The payment on July 1, 2006, still needs to be paid.
Battani: Has the city requested or received audited financial statements of revenues from the club? Provide documentation.
Answer: The report included financial statements the city has received.
However, in a letter dated Wednesday, Eckert wrote to John Roost, identified as the primary owner of the Explorers, "We are requesting a copy of your audited financial statements, including the audit opinion, for the years 2005 and 2006, as per Section 2 of your current lease with the city."
Battani: Has the city received and/or taken any action to collect the revenue due the city and if so provide documentation?
Answer: Following City Council approval of the revised lease on Dec. 19, 2005, the X's attorney discovered an error. The council has postponed acting to correct that clerical error several times, as recent as last Monday.
The lease should have said that the club should pay the city "5 percent of all gross receipts exceeding $1,205,000 in any calendar year. Payment shall be due 30 days after the last day of the month in which the last baseball game has been played if the minimum of $1,205,000 in gross receipts has been received."
The wrong figure of $205,000 was used instead of $1,205,000.
In the report, the city stated, "Due to the uncertainty of what the proper amount owing was, city staff has yet to bill the Sioux City Explorers Baseball Club for any rental due and owing under Section 2. Due to the uncertainty of what the proper amount owing was, city staff has yet to bill the club for any rental due and owing under Section 2."
Battani: Provide a copy of the city's policy and council minutes approving the use and disposition of the eight season tickets for employee recognition.
According to Williams & Co., the city's auditing firm, the Employee Advisory Committee and Eckert gave the tickets to workers as incentives for employee recognition. No list of names of those going to the games was included in the report.
"No formal policy was established for the disbursement of the tickets. Staff is drafting an administrative policy for the disposition of the tickets. A logging of the use of these tickets is being implemented immediately," the city replied.
Battani: Provide documentation on why City Councilman Marty Dougherty abstained from voting on the lease and provide an explanation of Dougherty's relationship with the Explorers and the city.
Answer: Dougherty, who went off the council a year ago, abstained from any votes relating to the X's due "to a perceived conflict of interest ... due to the fact that he is an in-law to one of the minority shareholders of the team. His brother-in-law is Shennen Salzman and he has a 1.0673 percent interest" in the Explorers.
City officials said they understood that some ownership of the team has changed since Dougherty voted on the revised lease.
Battani told the Journal Tuesday she asked Williams & Co. to provide additional information on the lease.
According to the CPA's firm letter, Battani said, "Based on their conservative calculations, the city should have collected $17,376 for the period Jan. 1, 2005, through Dec. 31, 2005, and $18,701 for the period Jan. 1, 2006, through Sept. 27, 2006 (the most recent date financial information was available to the CPA firm during audit fieldwork.)
According to the firm, the club "had not made any payments to the city."
Padmore said, "With the exception of the issue regarding the existing lease and payment due under that lease, staff feels that our responses will address all issues brought forth by the state auditor."
Lynn Zerschling may be reached at (712) 293-4202 or lynnzerschling@siouxcityjournal.com
Lewis and Clark Report
Date Action
11/16/92 First lease agreement signed.
Rent of $7,500 for the four months of season.
Parking: 50 cents each car in VIP area.
5 percent of net attendance receipts years 1-3;
7.5 percent of net attendance receipts in fourth year;
10 percent of net attendance receipts in fifth and future years
6/8/93 Skybox sublease to club at $5,000 for 1993, 1994, 1995
6/15/98 Revision of lease: $23,000 for use of stadium parking annual payment;
5 percent of gross sales fee on concession/novelty sales
Rent $8,300 for the four months of season
Another $200 a month added each year
Net attendance receipts 7.5 percent
2/7/00 Changed parking agreement to $1 per vehicle
5/2/01 Gas/electric meter put in X's name during season
11/15/01 Skybox charges forgiven; no longer charged
3/13/03 $61,000 loan to X's for concession equipment
10/13/03 Sent loan default letter
11/24/03 $8,287 received for equipment loan payment
6/15/04 $7,901.07 received for adjusted equipment loan payment
8/17/04 Lease payment delinquency letter sent
10/12/04 Lease and utility payment delinquency letter sent
6/26/05 $7,901.07 received for equipment loan payment
12/13/05 $4,561.70 promissory note payment received
12/19/05 New lease signed
X's to pay 5 percent of gross after $1.2 million
5/11/06 $7,901.07 equipment loan payment received
Lease Payments*
Year Ballpark Skybox Parking Adjusted Total Balance
1999 $34,000 $20,000 $28,750 0 $82,750 --
2000 $34,800 $20,000 0 0 $54,800 --
2001 $34,800 $20,000 0 ($13,700) $41,100 --
2002 $35,600 0 0 0 $35,600 --
2003 $36,400 0 0 0 $36,400 $36,400
2004 $37,200 0 0 0 $56,999 $93,399
2005 $38,000 0 0 ($131,399) $38,000 $131,399
Note In 2004, MidAmerican Energy bill owed for season was $19,799.
Charge adjustment of $131,399 is to comply with retroactive terms of Dec. 19, 2005, lease.
*From city finance department report
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Concerned Citizen wrote on Jan 27, 2007 10:34 PM:
smirky wrote on Jan 27, 2007 2:11 PM:
Observer wrote on Jan 27, 2007 8:02 AM:
Oh Come On!! wrote on Jan 27, 2007 7:59 AM: