Audit says town of Mt. Crested Butte relies on success of CBMR

Surprise!

An audit of Mt. Crested Butte’s 2010 financials shows that the town’s reliance on Crested Butte Mountain Resort (CBMR) and the tourism economy worked out pretty well last year but a few red flags did pop up. The town got good marks for increasing revenues and lowering its current liabilities.

Being a ski company town has its advantages, especially when the number of skier visits increased in the 2010/11 season by 6 percent and the sales tax collected by the town more than matches the increase.
As the audit reports, “The town’s ability to continue operations at its current level using sales tax revenue and property taxes is dependent on the continued success of Crested Butte Mountain Resort.”
It’s a fact mayor William Buck made a point of highlighting at a meeting of the Town Council on, June 7. “I think it’s important to recognize that,” he said.
But being a town dependent on tourism also has its pitfalls. The audit turned up a “lack of controls over the money being spent on the PUD [Planned Unit Development] and the Mt. Crested Butte Performing Arts Center,” according to town finance director Karl Trujillo.
The PUD was the process the town undertook as part of its partnership with the Crested Butte Music Festival to rezone part of town where the two entities plan to put the envisioned $14 million Mt. Crested Butte Performing Arts Center (MCBPAC).
The town and the non-profit MCBPAC share four members of their respective governing bodies, with mayor William Buck, mayor pro tem David Clayton, councilman Gary Keiser and town manager Joe Fitzpatrick all holding positions on the performing arts center’s nine-member board of directors.
The MCBPAC board is also made up of four appointees from the Crested Butte Music Festival, along with Western State College president Jay Helman.
Fitzpatrick has said there’s no legal conflict for those who make decisions for both the town and the MCBPAC, but the proximity between the two has made accounting for money exchanged hard to track.
“The auditors said there was a lack of controls on the money being spent on the Performing Arts Center,” Trujillo said. “We just started last year getting it through the PUD process so we were all sharing in the cost. We were getting bills and just paying them.”
According to town manager Joe Fitzpatrick, the town’s Downtown Development Authority pays 40 percent of the costs associated with the planning and design of Mountaineer Square North PUD III. With the rush to get the PUD process completed, he said, there was some confusion about who should pay for what.
“But there should be no more expenditures on that,” he said.
Mt. Crested Butte’s situation is a little different from most towns with a population of about 800 and total net assets of more than $7 million. Not only does sales tax collected from the resort fund a majority of the town’s operations, according to the audit, CBMR’s proximity to the town drives property values up—and the amount of property tax collected by the town goes up proportionally.
In addition, Trujillo says, the town is using some of that money to build up its reserves from a current 16 percent of expenditures to 35 percent. “We’ve got it all figured out for the next five years. We want to have money going into that [fund balance] every year.”
Aside from the give and take between the town and the tourism industry, there were a few things in the town’s finances that drew the auditors’ attention.
According to the audit, “During the year, the Downtown Development Authority debt service fund and the housing fund exceeded budget. This may be in violation of state statute.”
The audit also pointed out a few areas that the accountants at Johnson, Holscher & Company feel put the town at risk with its money, even if the risk is real only if the town is loose with its money—for instance, the town doesn’t have a policy about how much money can be invested with any one issuer. Trujillo isn’t worried, since the town invests primarily in
There is also town money in local banks that, according to the audit, could be lost if any of the institutions were to fail. However, Trujillo says, the money is safe, protected by the Public Depository Protection Act that insures all municipal deposits for 102 percent of their value.
“All of our money is protected by the Public Depository Protection Act…  Right now, with interest rates so low, they’re not making any money and some of the smaller banks can’t handle it.”
The audit has town officials looking forward to building budget reserves in the coming year after a long recession.