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HomeMy WebLinkAbout2024.06.10 EDAM REGULAR SESSION6/10/24 -1- DRAFT MINUTES OF THE PROCEEDINGS OF THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA REGULAR SESSION JUNE 10, 2024 CITY HALL – COUNCIL CHAMBERS 1. CALL TO ORDER The Brooklyn Center Economic Development Authority (EDA) met in Regular Session called to order by President April Graves at 7:55 p.m. 2. ROLL CALL President April Graves and Commissioners Marquita Butler, Kris Lawrence-Anderson, Dan Jerzak, and Teneshia Kragness. Also present were City Manager Reggie Edwards, Recreation Director Cordell Wiseman, Assistant City Manager/City Clerk Barb Suciu, and City Attorney Siobhan Tolar. 3. APPROVAL OF AGENDA AND CONSENT AGENDA Commissioner Butler moved and Commissioner Jerzak seconded to approve the Agenda and Consent Agenda, and the following item was approved: 3a. APPROVAL OF MINUTES Motion passed unanimously. 4. COMMISSION CONSIDERATION ITEMS 4a. RESOLUTION APPROVING THE TERMINATION OF THE AGREEMENT FOR FOOD SERVICE MANAGEMENT WITH FLIK INTERNATIONAL CORP Executive Director Reggie Edwards introduced the item and invited Recreation Director Cordell Wiseman to present the Staff report. Recreation Director Cordell Wiseman explained after consulting with attorneys and the Finance Department, it was determined it would be best to terminate the food service agreement. The agreement stipulates that the agreement may be terminated prior to the termination date by EDA without cause at any time by delivery of 60 days written notice. 6/10/24 -2- DRAFT Commissioner Jerzak stated he was taken aback by how the issues escalated without a Work Session for the Council to review the matter. He asked what guardrails are in place to avoid similar problems in the future. The unpaid funds are in excess of $1,000,000. He asked if the Heritage Center is on par with projections. The Council needs to determine if operating the Heritage Center is the best option for Brooklyn Center taxpayers. Mr. Wiseman confirmed the revenue goals are being met. Staff determined it wouldn’t be fiscally responsible to continue with the existing contract. Last year, they were in the hole of $700,000. The staff has a plan, and they don’t foresee losing any service. There is also a Request for Proposal process underway. Commissioner Jerzak asked if legal has been involved in the process. The finances are not balancing. Mr. Wiseman stated they believe the next contract will help them to draw revenue. Commissioner Butler stated some event centers allow folks to bring in their own food from a licensed vendor. Alternatively, some event spaces have a list of approved caterers. Mr. Wiseman confirmed Staff is looking at different options. They hope to find an affordable option. Completely removing catering from services would create a deficit in certain knowledge required. For example, they wouldn’t know about the licensing requirements for third party vendors. Commissioner Kragness asked how no one noticed the missing $1,000,000 after four years. Mr. Wiseman stated additional measures are in place to monitor the funds. The manager doesn’t see every bill that comes through. Also, there were COVID-19 impacts to work through. The contract never favored the Heritage Center. Commissioner Kragness asked if the discrepancy is something the auditors could have caught. Mr. Wiseman stated he doesn’t know how detailed the auditors are with the Heritage Center. Commissioner Butler stated in her full-time job, program managers will send out invoices to finance. Finance would just assume it was right. They made a change to avoid the issue. Before an invoice is approved, it needs to be reviewed by the director. Mr. Wiseman confirmed they had a similar issue. Commissioner Jerzak asked if the item needs to be voted on that evening. Legal hasn’t had enough time to review the issue as it has arisen so suddenly. Mr. Wiseman explained the vote is time- sensitive for the Heritage Center due to revenue sharing, Staff increasing, billing on unknown services, and more. They don’t want another deficit at the end of the year. Plus, their busy season is coming up. Commissioner Lawrence-Anderson stated they should move forward with the recommended action because it has been reviewed by the Finance Department and Dr. Edwards. She requested more accountability measurements be put in place. Loretta Halligan, General Manager for the Heritage Center, explained the original contract was not favorable for the Heritage Center. She won’t say who is at fault. There is a huge profit loss because 6/10/24 -3- DRAFT the contract favors the caterers. The Center could lose up to $2.5 million this year if the contract stays in place. Commissioner Kragness asked why the City wouldn’t terminate the contract as it is obviously losing them money. She asked if the caterer had acknowledged their debt. She asked why the City would continue to pay someone who owes the City money. Mr. Wiseman stated two wrongs don’t make a right. The City owes money to the caterer. The caterer and the City aren’t on the same page in terms of what the caterer owes the Heritage Center. Commissioner Kragness pointed out the document says the caterer owes the Heritage Center $343,647.70 for 2023. She asked if that was a calculation or a guess. Mr. Wiseman stated it is the calculation done by the Finance Department. The caterer doesn’t agree. Commissioner Kragness stated if there is documentation supporting the calculation, then it is a fact. Commissioner Jerzak noted Council is supposed to trust Staff. However, the Council could use regular reports or a Work Session to review the issue. The issue is compounding. President Graves moved and Commissioner Kragness seconded to adopt EDA RESOLUTION NO. 2024-02 authorizing the Economic Development Authority Executive Director to terminate the food service management agreement between the Heritage Center of Brooklyn Center and Flik International Corp. Motion passed unanimously. 5. ADJOURNMENT Commissioner Lawrence-Anderson moved and Commissioner Jerzak seconded adjournment of the Economic Development Authority meeting at 8:24 p.m. Motion passed unanimously.