LOVELAND – Larimer County officials are looking for ways to reduce a cash bleed at The Ranch that’s costing county taxpayers more than a half million dollars a year.

The situation at the county’s fairgrounds and events center in east Loveland has been driven primarily by debt and expenses connected with the McKee 4-H, Youth and Community Building, which opened in 2006. The building was largely funded with a $3.3 million loan from the county’s Solid Waste Department, and that’s now costing the county $200,000 a year in principal payments and another $40,000 in interest.

The problem is that the building is free for nonprofits like 4-H and Boy Scouts to use, with only nominal fees paid by for-profit users.

Add in losses from the County Fair that have ranged from $161,000 to $211,000 between 2005 and 2009, plus other operational expenses, and annual losses at The Ranch have climbed to more than $500,000 annually since 2009.

County officials are concerned that other facilities at The Ranch are having to help offset those losses and that continuing losses will force them to draw down precious reserve funds to help stem the flow of red ink.

“The urgency is The Ranch is a revenue fund and the revenue we get pays for salaries and operations and everything else out here,´ said Bob Herrfeldt, manager of The Ranch.

“Not getting any revenue from McKee means we’re paying off debt from revenue on other buildings, and the business model we have never anticipated the McKee Building glomming onto revenues produced by other buildings,” he said.

In addition to the McKee Building, the eight-year-old Ranch includes the Budweiser Events Center, First National Bank Exhibition Hall and Ranchway Feeds Pavilion, all owned by the county. The privately owned Embassy Suites Hotel and Conference Center leases space on the 250-acre site.

Fees wouldn’t help

Herrfeldt, county commissioners and other county officials have been studying the losses at The Ranch to come up with a solution to make the complex more solvent.

Charging nonprofit users a fee to use the McKee Building is one possible option, but not likely. Laurel Kubin, Larimer County Extension director, said there has been an unstated promise that 4-H, the biggest user of McKee, would always have free use of the facility.

“What I hear from the 4-H community is they would feel betrayed because they worked so hard to get the whole fairgrounds built and there was an implied promise they would have its use,” she said.

Herrfeldt said a staff study showed that charging 4-H a $20 fee for each event would raise less than $11,000 a year. Charging every user of McKee a $20 fee would raise only about $18,000, the study showed.

Even charging all users a $40-per-event fee would raise only about $36,000 annually – just a drop in the bucket of what’s needed.

Herrfeldt said about $1.1 million of the $3.3 million loan to build the McKee Building has been paid off, leaving another 10 years’ worth of payments to be made at the current rate.

That’s a long time for the red ink to keep flowing and not a particularly attractive option.

“There’s a myriad of things we could do,” Herrfeldt said. “But we need to figure out the best way to do it. One of the options is the county dipping into its reserves and we pay off the loan, or we could pay more per year to pay it off sooner.”

Fair losses improving

A lesser but still significant part of the cash drain at The Ranch is the annual county fair, this year set for Aug. 5 through 9. Losses at the fair hit a high in 2008 when $211,000 was needed to cover expenses.

The county fair has been free to attend except for one year after the fair was moved from the Loveland fairgrounds to the newly built Ranch.

“One year after it moved to the new grounds they tried to charge admission,” Kubin said. “It didn’t go over well.”

Not only is admission to the fair free, but so is parking.

But new attractions and an emphasis on “homegrown” entertainment have reduced losses in recent years, with last year’s loss coming in at only $72,000.

“The financial losses have improved tremendously,” Kubin said. “We’re far less in the red ink than we’ve ever been. No county fair really makes money. It’s really a community service.”

County Commissioner Steve Johnson said “there are some financial challenges we need to address” at The Ranch, but emphasized the county realizes the importance of what the complex means to the community.

“The commissioners do believe that investing in our community is a wise investment,” he said, noting that supporting 4-H is particularly important.

“We’re very impressed with the kids that have gone through that program and the leadership skills they acquire,” he said.

Johnson said one thing he would like to see is an increase in the $1 facility fee charged for a ticket to see Colorado Eagles hockey games.

“I’m a season ticket holder, but it doesn’t make sense that we have the best arena (Budweiser Events Center) in the league yet a facility fee that’s among the lowest in the league,” he said.

Johnson said he’s encouraged adding $1 to the facility fee – or $2 per ticket – which would bring in an extra $150,000 per year.

But Johnson said he believes the best course is to remove the debt now saddling The Ranch so it can improve its chances of becoming self-supporting.

“If we’re going to make that investment, we need to make it from the general fund and not from The Ranch,” he said. “Retiring the debt is the biggest dent, the easiest thing we could do.”

County commissioners were scheduled to look at various scenarios for addressing The Ranch’s debt at their July 12 meeting, after the Business Report went to press.

“We asked (Ranch staff) to come back with some specific numbers on refinancing and the cost to the county,” he said. “If the numbers look good, we’ll authorize them to go forward.”