Point of View
Understanding The Financial Aspects Of The Forks
January 11, 2007
Happy New Year!
Clare MacKay, our Marketing and Communications Manager, raised an issue with me that seems to require some clarification. Over the holiday season Clare was in discussion with friends and the topic of The Forks came up. This is not unusual given that almost everyone has something to say about The Forks, and it is usually a very positive discussion, as was this one. But Clare noticed that assumptions were being made about our receiving annual funding from our Shareholders – the three levels of government. Over the years I too have been in similar discussions where I politely set the record straight. Like many publicly owned corporations there is a lack of understanding of the financial aspects of the business.
This is my attempt to add clarity to those that are interested in how we operate financially.
First it is important to note that we receive no operating funding from any level of government. North Portage Development Corp (NPDC) was created in 1984 as part of the Winnipeg Core Area Initiative (CAI). Funds were provided through the CAI for start up planning, and the three levels of government provided front-end capital funding to assemble land and facilitate private sector investment. This investment was based on a business model where NPDC would enter into development agreements that provided a long-term payback through land-lease agreements and real-estate transactions. In 1987 The Forks Renewal Corporation (FRC) was established as a subsidiary of NPDC. It also received funding through the CAI and the tri-level government partners. NPDC was successful in its private development objectives and now receives significant annual revenues through land leases and parking revenues. FRC also receives revenue through its land-lease arrangement and its parking. However given the low level of development and park-like setting at The Forks revenues are considerably less than that of NPDC.
In 1994 the two corporations merged as a step in addressing financial challenges. Operating under one management team a new entity was established under the name The Forks North Portage Partnership (The Partnership). The impetus for this merger was due to the healthy financial position of NPDC while The Forks faced annual shortfalls. The objectives of the corporations are to be financially self-sufficient. The Shareholders believed that the initial investment set a solid foundation and were not in a position to continually underwrite operating losses. The merger has been successful in achieving that objective.
The initial capital investment is receiving an annual return on investment in the $9.0 million range. This allows The Partnership to run programs at The Forks, address our significant site operating costs, address operating losses at IMAX, and advertise and promote The Market, IMAX, and our many events. Once the dust settles we expect an annual profit before depreciation in the $700,000 to $1,000,000 range. (We have not yet achieved the illusive $1.0 million target.). At least half of that number is reinvested in capital improvements in the following year.
It is also important to note that we do receive some external funding through community sponsors and without those partnerships we would not have the new Skateboard Plaza, Artic Glacier Winter Park, Rogers Canada Day celebrations, or programming on Scotiabank Stage. We also are eligible for infrastructure funding as are many community owned entities, and have received some level of capital funding on a project by project basis over the years.
I hope this is helpful for those of you who think about this kind of thing. Our annual financial reports are available on our web-site if you would like further information.
Cheers, Jim
January 26, 2007 - Leave a CommentThe Year In Review
A summary of The Partnership's activities over the last year
December 28, 2006 - Leave a Comment
Visit To Portland
The Forks receives high praises at Waterfront Center annual conference.
October 6, 2006 - Leave a Comment
The Forks Survey Results
Survey results are in for The Forks
September 21, 2006 - Leave a Comment
Welcome To My Point Of View
Introduction to Point of View
September 7, 2006 - 1 Comments