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Charly Haley, Forum News Service, Published January 14 2014

Alerus Center revenue growth prompts upgrades, possible expansion

GRAND FORKS - The Alerus Center in Grand Forks has experienced a sharp spike in revenue growth the past two years, leading the center to upgrade facilities and consider expansion, according to officials there.

Last year, the city-owned events center’s “retained earnings,” which is a running tally of profit and loss since 2001 when the center opened, reached more than $1.2 million, said Darryl Jorgenson, finance manager. That’s an estimate, he said, and the exact amount is still being determined.

It’s by far the highest retained earnings the Alerus Center has seen since it opened, according to Jorgenson’s data.

“The trend is upward,” he said.

To keep up with the growth, the events center has upgraded its facility the past couple of years, from technology to food service, and more upgrades are ahead, said Cheryl Swanson, executive director.

Alerus Center officials are also considering purchasing land south of the event center for possible future expansion, although how exactly the land will be used is still undecided, she said.

Profits

Last year was the second consecutive year the events center had positive retained earnings, according to Jorgenson’s data. The lowest retained earnings were from 2008 to 2011, when it dipped as low as negative $508,000.

The Alerus Center still owes about $1 million to the city, which shores up the center’s budget in years when the center loses money. If the center were to pay off that entire amount now, it would still have about $1.2 million.

But events center and city officials would prefer the Alerus Center keep some money in reserve rather than pay the debt in full, Jorgenson said. He said they’re working on a plan for the event center to repay its debt and remain financially sound.

Many factors contributed to the center’s steep increase in profit from 2011 to 2012, Swanson said. Those factors include scheduling more events and effective management of expenses and staff.

Despite losing money between 2008 and 2011, the Alerus Center’s average number of events per year since opening has continued to steadily increase, according to Jorgenson’s data.

More than 450 events were held each year at the events center in both 2012 and 2013 — more than any other years.

Each year’s profit also involves “a little bit of luck” with “uncontrollable costs,” such as snow removal and utilities, Swanson said.

With a building the size of the Alerus Center, those costs carry a lot of weight, she said. She remembered 2012 as a good year for utilities because of milder weather.

Expansion

The event center’s recent growth in revenue, along with nearby building development, prompted center officials to consider purchasing several adjacent lots to the south.

Negotiations for the land have been discussed by the Grand Forks Events Center Commission and its Finance/Renovation Committee in recent months.

Although the Alerus Center doesn’t know what it would use that land for yet, Swanson said she wanted the possibility of buying the land to be discussed because it’s the only available land adjacent to the center, which is otherwise surrounded by a hotel, apartments and Interstate 29.

Swanson said she believes there are other buyers interested in that land, “so if we didn’t act quickly or at least become engaged in the process ... there would not be land to buy.”

“The opportunity would slip away if we don’t have a discussion about it,” she said.

The land purchase issue will be brought to the Events Center Commission at its Jan. 22 meeting for discussion and possible action, Swanson said. If the commission decides to move forward with the purchase, she said, it would still have to be approved by the city’s Finance/Development Committee and then the City Council.

The Alerus Center would be “very strategic” in how it would use the land because it’s the only option for expansion, she said. She envisions a strategic planning process for the land involving input from industry experts, she said.

Upgrades

Though the land expansion is still in discussion phases, the Alerus Center does have more concrete plans to continue upgrading its facilities.

In the past few years, the event center has added projection screens to many of its meeting rooms and has upgraded its wireless Internet access, along with other technology features, said Danielle Bratvold, sales manager at the Alerus Center.

Just this past year, electronic screens were added to the center’s parking lot to provide directions for events, and clients’ positive feedback on catering has prompted the center to upgrade its kitchens and hire two full-time assistant chefs, Swanson said.

“Those are all very expensive ventures ... but the clients expect it,” she said.

The center also plans on getting new arena scoreboards and message boards in time for the next UND football season, she said.

In 2013, conventions and conferences generated more revenue than arena events, such as concerts, shows and sports, Swanson said. And conference events, which often have overnight attendees, also provide more economic impact on Grand Forks, she said.

But the community is interested in arena shows open to the public, she said, so the center continues to pursue those events.

In the coming year, “I think that you’ll see more conventions and conferences at the Alerus Center, but we’re always seeking concerts and entertainment, ticketed events as well,” she said.