ORDA audit: Improve financial practices

LAKE PLACID – The state Olympic Regional Development Authority needs to improve its financial practices, the state comptroller’s office said in an audit released Wednesday.

One of Comptroller Thomas DiNapoli’s most serious charges is that ORDA put zero profits into its capital improvement fund and that the fund has no balance. State law requires ORDA to establish a fund to provide for capital improvements and repairs to the Olympic facilities it is charged with maintaining. The law requires a deposit of 25 percent of operating profits each year.

Profits are hard to come by with ORDA, however. The audit also reported that ORDA relies on loans and outside contributions to cover annual cash shortages. From April 1, 2010, through March 31, 2013, the authority’s losses totaled $4.2 million. ORDA’s losses totaled $45 million over this same period if a number of other factors are included, like depreciation, accounts receivable and post-employment benefits due its employees, the comptroller’s office wrote.

“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 wrote in a press release. “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.”

Jon Lundin, the director of communications for ORDA, wrote in a statement that the authority is working with the state Division of Budget to address the comptroller’s audit.

“In working with the Division of Budget, programs have already been put in place to address many of the recommendations, with the overall goal of generating additional revenue and capital,” Lundin wrote. “They include additional activities at all ORDA’s venues and more energy efficient operations at all venues.”

Some of DiNapoli’s recommendations for the authority are that it conduct a “top-to-bottom” review of spending, estimate expenses better and award contracts competitively. Out of a sample of 29 bids, 11 of them, totaling $427,000, were not competitively bid.

ORDA responded in a formal written statement that “it’s important to evaluate the nature of the business under which ORDA operates” because “ORDA is not a typical state authority.

“With that in mind, it’s critical to realize that nearly eighty-five percent of annual revenue are earned over a 4 month period of winter business.”

ORDA officials wrote that it’s “unrealistic to think” a multi-year budget plan could fix financial struggles because weather and tourism are unpredictable.

Examining the authority’s revenue stream and its corporate sponsorships, auditors found that the authority could increase its income. The comptroller’s auditors listed a few specific instances where ORDA could have managed its corporate sponsorships better.

Chevrolet lets ORDA use up to 12 vehicles for three years at a value of $219,627. In return, ORDA provides tickets, advertising and condominium use at an estimated value of $381,000 per year, the audit reported. ORDA claimed it used $36,000 in worth of stays at the Desmond Hotel in Albany received from a sponsor but “declined to provide information documenting the use was for ORDA business purposes.” Some of these sponsors – Coca-Cola, J. Lohr Vineyard and Chevrolet – received excess stays at an ORDA-leased condominium. In total, those three sponsors received an additional 54 nights, valued at $13,500. ORDA officials did not request or receive $12,000 worth of beverages owed through a sponsorship agreement with Chevrolet.

“Unlike most traditional vendor contracts, the value of sponsorship agreements are often defined by fluctuating and subjective industry practices as opposed to tangible figures,” ORDA wrote in response.

ORDA wrote that it’s in their best interest to lease the vehicles annually from Chevrolet because it saves money, and that the tickets, advertising and condominium stays ORDA gives have “no ‘actual’ cost” to them. ORDA also responded that the hotel stays in Albany were for an ORDA employee for business purposes, and the authority disagreed with the auditors’ valuation of condominium stays for sponsors because they “lease the property on an annual basis, so the cost is incurred regardless of use.”

At a ORDA board meeting in June, CEO and President Ted Blazer highlighted upcoming capital improvements, including replacing an old ski lift at Gore Mountain Ski Center in North Creek with a new high-speed chairlift. Refurbishments to the pool house ramps at the Lake Placid ski jumps will also be made, and a leaky roof will be fixed at the Olympic Center arena complex in Lake Placid.

In recent years, auditors said ORDA has used a line of credit to cover its operating costs and payroll. 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,” the audit reported.

The authority was last audited in 2008. That audit found that an ORDA lawyer was wrongly receiving retirement benefits. The lawyer, John Cansdale, should have been treated as an independent contractor, not an employee, the audit found.

ORDA operates the Whiteface and Gore Mountain ski centers in the Adirondacks, Belleayre Mountain Ski Center in the Catskills, the Mount Van Hoevenberg complex of sliding and cross-country ski venues, and the Olympic Center and Olympic Jumping Complex facilities that the town of North Elba owns. ORDA is governed by a 12-member board of directors chaired by Patrick Barrett. Barrett declined to comment Wednesday, saying he needed to read the audit first.

A full copy of the audit can be found online at osc.state.ny.us/audits/allaudits/093014/13s18.pdf