Riverhead BID spends $200,000 surplus in three years

BARBARAELLEN KOCH FILE PHOTO | Events like the Mardi Gras festival could be history as the Riverhead Business Improvement District Management Association looks to scale down its schedule of events for coming years.

The Riverhead Business Improvement District Management Association, which runs a slew of downtown events behind East Main Street using BID funds, is close to using up the entire $213,000 surplus it had 2 1/2 years ago, leaving no extra cash to throw around on what have come to be popular attractions like antique shows, country western concerts and music or Mardi Gras festivals.

Aside from scaling down its schedule of events for coming years, BIDMA leaders are also hoping to direct more funds toward capital projects, such as a year-round ice skating rink with a roof that could cost as much as $400,000, officials said.

According to town records, the BID’s adopted budget for 2011 was $101,540, yet by that year’s end, its actual spending amounted to $213,824 — more than double what was budgeted.

Likewise, in 2010, BIDMA’s adopted budget was $111,000 and its actual spending at the end of the year was $168,129.

It was fund balance — or reserves — that enabled the BID to exceed its adopted budgets by so much.

The BID ended 2009 with a surplus of more than $200,000 and has been spending down that amount for the past two and a half years, the records show.

Officials from BIDMA and the town say there is now very little left of that surplus.

Riverhead Supervisor Sean Walter, who has often spoken highly of the current BID leadership, says he has no problem with that.

“The point of the BID budget is not to have a surplus,” he said. “It’s to get events and projects to promote downtown, and that’s what they are doing. I think the surplus is largely gone, but I don’t have a problem with them spending it.”

Town finance administrator Bill Rothaar said the town has a fund balance policy that recommends it keep a surplus that’s at least 15 percent of its budget, but he said the policy doesn’t apply to smaller special districts like the BID. He said he’s not aware of any laws prohibiting the type of large surplus the BID accumulated.

The BID ended 2009 with $212,283 in unspent funds from previous years, according to figures obtained from Mr. Rothaar.

By the end of 2010, the surplus was down to $137,659 and by the end of 2011, it was down to $27,841.

The BID is a taxing district that covers businesses in downtown Riverhead, which pay a special BID tax. The BID’s management association -— technically a nonprofit group separate from the taxing district itself — runs concerts and events designed to promote downtown. It also undertakes projects aimed at making the area more attractive to businesses and shoppers.

Riverhead’s five Town Board members are the commissioners of the BID, but the 12-member management association runs its day-to-day operations.

BIDMA basically stopped spending money on events and projects around 2005 through 2008, having accumulated a large debt following the 2005 Blues Festival, the last one run by the BID. That festival reportedly lost about $50,000, officials said at the time.

The Town Board had commissioned a report in 2005 that put the BID debt at $54,527. While the town made up that deficit through general fund taxes, BIDMA was made to repay the town through its budget, which the Town Board sets, in subsequent years.

Former BIDMA president Bill London told The News-Review in 2008 that its members spent much of 2006 and 2007 combing through financial records and cutting costs and that the BID didn’t fund many events and didn’t spend much of the taxes it collected during that time.

“We had a year of nothing,” former BIDMA vice president Vince Tria told The News-Review in 2008. “The town cut off the BID because of the prior mistakes.”

Officials said the BID had accumulated more than $200,000 by 2008 by not spending its money.

Current BIDMA president Ray Pickersgill said the BID had a huge surplus when he took over as president in 2010 and management association members felt the money should be spent.

“We weren’t supposed to have so much in our reserve account,” Mr. Pickersgill said. “I knew we had to use the reserve account, so we decided to take on every project we could possibly do.”

The BID budgets for 2010 and 2011, which were approved by the Town Board, included popular events like the Cardboard Boat Race, the Cruise Night car shows on Thursdays, a country western concert, an oldies concert, a holiday bonfire, a jazz concert and a Fourth of July concert and fireworks show.

The BID added a Mardi Gras festival in 2011 that was not in the original budget, which Mr. Pickersgill said ended up costing much more than expected.

“It cost about $40,000,” he said. “I expected it to cost about $20,000.”

But he said it was a good event that he’d like to bring back someday if the BID can afford it.

The BID also gave money to other nonprofit organizations, like the East End Arts Council, the Long Island Science Center and the Long Island Railroad Museum, he said. And he said BIDMA had to clear some up bills left over from prior boards.

In order to use surplus funds, Mr. Pickersgill said, the BIDMA board must approve it, and the Town Board must approve it.

Mr. Rothaar also said the Town Board must approve BID requests to use surplus money and the BIDMA must present a resolution from its board, however, he said the town doesn’t require those resolutions until the end of the year. He suggested the town should require the resolutions at the time of the request.

Mr. Pickersgill said that while the events over the past two years have brought people to downtown Riverhead and helped some of the businesses there, BIDMA probably will not be doing as many events next year because it won’t have the surplus money and because parking in downtown will be limited once the Summerwind apartment complex opens. That’s expected sometime this fall.

Because of this, he says, he is turning his attention — and the BID’s funds — toward building a synthetic ice skating rink in the downtown parking lot behind the former Swezey’s building.

The BID has a $100,000 county grant for this project and Mr. Pickersgill believes he can get another $100,000 grant as well.

The Town Board has yet to formally authorize Supervisor Sean Walter to sign the contract for that grant, and plans to discuss it further.

Initially, Town Board members were told by Councilman George Gabrielsen that the rink would not have a roof over it.

But last Wednesday, BIDMA said it wants the roof, which would also allow the structure to be used as a concert and events pavilion.

The project would cost about $200,000 without the roof.

BIDMA vice president Marty Sendlewski, an architect who is designing the project, said it would cost about $100,000 more to buy the roof and about another $100,000 to install it.

But Mr. Pickersgill believes the purchase and installation can be done for about $100,000 more, bringing the total to about $300,000.

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