Published April 29 2010
North Dakota Horse Park looks for ways to pay off debt
The hard part: figuring out how to make the horse park financially viable and how to repay $1.4 million owed to the city of Fargo and $250,000 to the Greater Fargo-Moorhead Economic Development Corp.
After last week’s announcement that the horse park won’t host racing this summer, both the city and the development corporation are taking a hard look at its outstanding debts.
Members of Fargo’s Finance Committee met Wednesday and decided to open a dialogue with HRND officials to find out “what the ultimate plan is” for operation of the park, said Kent Costin, the city’s finance director
The city spent $1,477,789 to extend sewer, water and other infrastructure to the horse park, which opened in 2003.
Costin said HRND is responsible for $560,434 of the special assessments, while the North Dakota Horse Park Foundation, which owns the horse track, owes the remaining $917,355.
To help the park cover the costs, the city created a tax increment financing district. The idea was that as the land around the park was developed with residential and commercial buildings, it would generate additional property tax dollars to be used to pay off the special assessments.
But the development hasn’t materialized. In late 2008, the City Commission agreed to extend the five-year deferment on special assessments by another three years, giving the park until Feb. 15, 2012, to pay back the city.
City Commissioner Mike Williams cast the lone vote against the extension. He said Wednesday that horse park officials knew the first payment was due in early 2009, and he suggested they budget for it, “because it didn’t appear that they were.”
“It was just pretty obvious that the business model wasn’t working,” he said, adding, “I hope they can figure out a way to make it financially viable.”
Ken Pawluk, who sits on the foundation’s board of directors, said the outstanding specials are “the primary thing that as a board we’re working to try to get resolved.”
“The foundation is working on several things that should provide the revenue that’s needed, some construction opportunities or development opportunities,” he said. “We’ve had several near-misses, and we’re hopefully going to have one that goes forward here soon.”
Pawluk said the foundation was “very close” to a residential development, “but, quite honestly, with the uncertainty regarding Horse Race North Dakota and their problems, that caused the prospect to back away from it.”
Also coming due is HRND’s loan from the economic development corporation – money that came from a loan pool generated by Fargo and Cass County taxpayers.
In 2001, HRND took out the $250,000 interest-free loan to buy 33 acres of the 113-acre horse park.
The loan agreement calls for repayment to start after 10 years. However, repayment is based on HRND’s ability to pay, and the agreement allows for a loan extension, said corporation President Brian Walters.
The corporation’s executive committee and board of directors will address the loan in May, he said.
“Ultimately, it’s the board’s decision how they want to handle it,” Walters said. “There’s no doubt there’s an obligation to repay the $250,000.”
As for the roughly $150,000 in outstanding debt from 2009, Cichy said HRND is negotiating with an individual who has expressed a willingness to co-sign a $100,000 loan to pay off the debt. The state Racing Commission has agreed to grant the other $50,000 if HRND can provide proof that it has secured the loan.
“I see that as solvable,” Cichy said.
The debt is held by several vendors, including food and beverage dealers, advertisers, a security firm, a photographer and a machinery dealer, he said.
Even if last year’s debts are repaid, there won’t be racing at the horse park this year. The state Racing Commission withheld funding from its purse and promotion funds this year.
“We needed to see a plan of how they were going to pay off the debt from 2009,” state Racing Director Winston Satran said.
If last year’s debt is repaid, the commission will work to reinstate racing in 2011, Satran said.
“That would be a goal,” he said.
Readers can reach Forum reporter Mike Nowatzki at (701) 241-5528