Mecklenburg may not pay final $1 million to Whitewater Center

03/02/2014 6:05 PM

03/02/2014 6:17 PM

Mecklenburg County is considering not paying a final $1 million installment to the U.S. National Whitewater Center as part of a seven-year, multiple-government subsidy to help fund the 400-acre park.

Under the agreement, the park would get up to $12 million in “service fees” over the seven years that began in 2006 and is ending. Since the center opened that year, it has included more than $1.7 million a year in its revenues from six governments: Mecklenburg and Gaston counties, the city of Charlotte and the Gaston County cities of Mount Holly, Belmont and Gastonia.

A million dollars has come each year from Mecklenburg. Under the agreement, the county would pay up to $7 million and the city of Charlotte, $2 million.

Yet Mecklenburg Finance Director Wanda Reeves is “absolutely considering” whether to withhold that final installment on the recommendation of county Park and Recreation Director Jim Garges.

“I am looking at it and making sure we’d be in compliance” if the county didn’t pay, Reeves said. “We want to verify all the numbers before making a decision.”

The decision is up to Reeves, who may decide as early as Monday. Withholding the payment wouldn’t require approval from county commissioners.

The whitewater center’s marketing director, Jesse Hyde, declined to respond to several questions about the potential loss on Friday, writing “we are not addressing this issue in the media.”

The center’s financial report filed with the county shows it had more than $4 million in operating profits – revenues over expenses – in the fiscal year that ended last Oct. 31. That is down nearly $350,000 from the previous year because of higher expenses such as wages, food and retail purchases, supplies, insurance and marketing.

Yet the $1.7 million from government subsidies was included in the revenues. The center, the report said, expected to collect that money early this year.

Reeves said the center is allowed to include the money it spent to pay down debts in its request for Mecklenburg’s final $1 million. The center’s financial statement said it paid more than $3.1 million last year and $2.9 million in 2012 in additional principal payments.

“The debt service is an allowable expense in calculating whether or not they qualify for the fee,” she said. “They anticipated their operating income would not show a profit.”

But it did, Garges said, relieving the county of any obligation to pay the final installment.

“The payments are based on loss,” Garges said. “They’re not in a loss position; so in our opinion, we don’t believe we owe anything this year.

“They think we owe them money and that the numbers reflect that. That’s not how we see it.”

The nonprofit facility in northwest Mecklenburg sits on 400 acres of county-owned land, which it rents for $1 a year on a 40-year lease that ends in 2044.

Before it opened, the economy was booming and backers said the center might never need public money. They expected the center to pay off loans – from 40 banks and other private lenders – on its own.

But as the economy soured, the center was unable to pay off the principal of its construction loan and defaulted.

Yet in 2010, the lenders forgave $38 million of its debt, about two-thirds of its mortgage. Since then, the center has retired most, if not all, of the remaining $12.4 million in loans, in part by using the government subsidies, Reeves said.

The center’s Hyde wouldn’t say what impact the possible loss of the subsidies could have on the facility’s operation.

Garges, who has been working with center officials, said he believes it is on surer financial footing.

“From where it was prior to the recession ... I think it is on a solid trajectory, particularly after a substantial part of the debt was wiped out,” he said. “The whitewater center today and into the future is in great shape. They’re very successful, and they’ll continue to be.

“It’s top shelf – one of the finest recreation facilities as you’ll find anywhere.”

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