“Financial Practices Need to Improve” at ORDA

STATE AUDIT FINDS ORDA NEEDS TO IMPROVE FINANCIAL PRACTICES”

The New York State Olympic Regional Development Authority (ORDA) relies on loans and outside contributions to cover cash shortages and in recent years has used a line of credit to cover its basic operating costs, including payroll, according to an audit released today by New York State Comptroller Thomas P. DiNapoli. In some cases, other state agencies have paid ORDA’s bills, including $1.5 million of capital lease payments ORDA could not pay since December 2008.

“ORDA’s continuing struggles to maintain fiscal balance show that the authority needs to explore new ways to save costs and commit to sound financial planning going forward,” DiNapoli said. “ORDA needs to develop a realistic and detailed multiyear financial plan to build its cash reserves and maintain operations for the economic benefit of local communities, as well as the tens of thousands of people who enjoy its attractions.”

ORDA operates the Whiteface and Gore Mountain Ski Centers in the Adirondacks, the Olympic facilities in Lake Placid, and the Belleayre Ski Area in the Catskills. The majority of ORDA’s operating revenue is earned in the last five months of its fiscal year, from November through March.

From April 1, 2010, through March 31, 2013, ORDA’s losses totaled $4.2 million on a cash basis. Including depreciation, accounts receivable and post-employment benefits due its employees, ORDA had losses totaling $45 million over this period.

DiNapoli’s auditors found that while state law requires ORDA to establish a fund to provide for capital improvements and major repairs to the Olympic facilities, and requires a deposit of 25 percent of operating profits each year into the fund, ORDA had no profits from operations and had no balance in the fund.

As a consequence, ORDA is dependent on the state and other public entities for capital contributions and grants. For example, the Empire State Development Corporation awarded ORDA a $15.2 million “Working Capital Grant” in 2006, and in fiscal year 2012-13, ORDA received a $5 million appropriation from the New York Works program.

In June 2013, ORDA owed $3.4 million on its outstanding line of credit (LOC). At the end of fiscal years 2007-08 through 2012-13 it owed amounts ranging from $2 million to almost $4.6 million. ORDA incurred $531,518 in interest and fees between January 2008 and June 2013 because of the credit balances.

DiNapoli’s auditors examined ORDA’s revenue stream, particularly corporate sponsorships, finding the authority could take additional actions to increase its income.

DiNapoli’s auditors found:
• In one sponsorship with a vehicle manufacturer, ORDA receives use of up to 12 vehicles for three years at a value of $219,627 over that time. In return, ORDA provides tickets to its venues plus advertising and condominium use at an estimated value of $381,000 per year;
• ORDA claimed it used $36,000 in hotel stays received from a sponsor but declined to provide information documenting the use was for ORDA business purposes;
• Three of the seven sponsors reviewed received more stays at the ORDA-leased condominium than called for in their agreements, including one that received 45 excess stays during the audit period. In total, the three sponsors received an additional 54 nights, valued at $13,500, over their agreed allotment for the three fiscal years ended March 31, 2013; and
• ORDA officials did not request or receive $12,000 worth of free beverages due ORDA through a sponsorship agreement at Gore.

DiNapoli’s auditors also reviewed a sample of 29 procurements totaling $8.2 million, finding 11 procurements totaling $427,000 that were not competitively bid. In these cases, ORDA did not provide sufficient documentation as required by its purchasing policy to support why a contractor was selected or why a competitive process was not used.

DiNapoli recommended ORDA:
· Develop a more accurate method for estimating expense and revenue amounts used in the multiyear financial plan to ensure that the budgets are balanced, operating expenses are closely scrutinized during the year, and estimates are reviewed to determine that they are still valid;
· Maintain support for budget assumptions and calculations as required;
· Conduct a top-to-bottom review of ORDA’s organization and spending to identify cost-containment opportunities;
· Award contracts on a competitive basis and fully document any waivers permitting non-competitive procurements including the reason(s) for the decision; and
· Establish and follow procedures for the corporate sponsorships which, at a minimum:
o Develop consistent evaluation procedures to determine whether a sponsorship is beneficial for ORDA, and retain documentation of the evaluation;
o Track to ensure all in-kind trade items due to ORDA through sponsorship agreements are received and used for an ORDA business purpose; and
o Track ORDA’s sponsorship responsibilities to ensure ORDA does not compensate sponsors beyond the terms of their agreements.