Marble Mountain relying on credit: AG report

Daniel
Daniel MacEachern
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Skiers and snowboarders enter Marble Mountain Lodge.— Photo by Geraldine Brophy/The Western Star

The annual auditor general’s report says the Marble Mountain Development Corporation needs better control of its bank account.

Acting auditor general Wayne Loveys’ report, released Wednesday afternoon, identified several problems with the corporation, which has its office in Corner Brook, and its management of the ski facility.

Among them:

•    The corporation has run a deficit for each of the last five years, requiring an annual provincial operating grant as well as an approved line of credit of $2.1 million guaranteed by the province, of which $1.9 million has been spent by the corporation.

•    Because the corporation’s bank indebtedness, interest expenses and bank charges total $164,115 for the three years ending April 30, 2011.

•    The company’s ski lift operations have run a deficit in each of the last three years, totalling $1,359,224. A major expense related to the ski lift is a contract for management of the service, but a review of the contract found that after it expired in 2005, it was renewed for a three-year period and then three two-year periods, expiring in 2014, without any further public tender. Weekly invoices from the contractor, required by the contract, have not been submitted, and the corporation has also paid expenses of the contractor including vehicle rental ($7,232) and snow gun rental ($5,650), among others, despite those expenses not being covered by the contract.

•   The use of fuel for the three snow groomers ($51,000 in the year ending April 30) is not monitored, and the corporation doesn’t know if the fuel is being used for vehicles other than the groomers.•   Six purchases totalling $119,295 were not tendered as required, including two snowmobiles, costing $32,705.

In its response, the corporation acknowledges its financial difficulties, and says it has been examining alternatives to reducing its dependency on the line of credit.

“However, given the limited cash flow and operational demands, there are no foreseeable opportunities for reduction of this debt,” says the response. Elsewhere in the response, the corporation says it will review its procedures and update them as required.

Bob Pike, chairman of the corporation’s board of directors, told The Telegram the ski facility has had a difficult couple of years.

“With the auditor general’s report, I have to say I’m somewhat disappointed with the result, but at the same time I will say that we certainly accept the content of the report and I have to thank the auditor general and his team for the effort they put into this,” he said, adding that the report brings a lot of opportunity for improvement.

“But I think we have to recognize that Marble Mountain’s corporate management team has experienced unprecedented turnover in recent years. But if you look at where we’re at now and where we’re going, we have a new general manager in place, and we have a new manager of finance in place. And because of that, we’re well underway to making improvements in many areas.”

Derek Dalley, minister of tourism, culture and recreation, said the report has identified several areas that require attention.

“I’m confident that the corporation will be compliant with the AG’s recommendations,” he said. “As for the actual finances of Marble Mountain and the challenges that they’ve had, I think we fully recognize, particularly the past couple of years, it’s been a bit of a struggle.

The weather’s certainly hampered a lot of the opportunities for Marble Mountain. As well, they’ve gone under some significant changes with respect to senior management and leadership. We’re optimistic. They started skiing this year on Boxing Day. They have snow. We have new leadership. They’ve got some new ideas, so as a government, certainly as a department, we’re confident that they’re on the right track to be much more successful.”

 

dmaceachern@thetelegram.com

Twitter: TelegramDaniel

Organizations: Marble Mountain Development, The Telegram

Geographic location: Marble Mountain, Corner Brook

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Recent comments

  • Eli
    January 26, 2012 - 13:57

    Marble Mountain Resort on the west coast and Mile One Stadium on the east coast. With debt at both bookends of our province is it any wonder what's in between. Oh! for the blanket of Cabinet Secrecy.

    • brett
      January 27, 2012 - 09:58

      Mile One is more than covered via the accommodation taxes in St. John's. Taxes that were levied on hotels + b+b's specifically to pay for Mile One.

    • Gerry
      January 27, 2012 - 10:52

      Brett, could you please explain why Mile One gets a grant of half a million bucks from St. John's City Council if it's costs are covered by the accommodations tax?

    • brett
      January 27, 2012 - 16:36

      Technically maybe not, but after the first "x" dollars (don't have figures) of accommodation tax dollars are given to Mile One, the overflow is used by the city (although most is for advertising for the tourism department). I couldn't find the figures, but should all the accommodation tax be put towards Mile One that would more than cover the grant.

    • Anne
      January 30, 2012 - 12:17

      No, the accomodations tax has never raised enough revenue to cover the operations subsidy of Mile One. You can check city budgets on-line to verify that.

    • brett
      January 30, 2012 - 23:45

      Accomodation Tax: $1,428,800 But what I don't know how to find out is how much is put towards mile one stadium, and how much is used for other things, or how big the grant for Mile One is. (was assuming Gerry's 500k was accurate)

  • Gerry
    January 26, 2012 - 13:39

    Isn't this a private operation??Government should not spend one more cent on this. People of GFW and Stephenville should be up in arms if any more taxpayers money is spent on this. I guess the paper mill in C. Brook is lining up for more bailout money. Nice to to have Tom and the boys around

  • brett
    January 26, 2012 - 09:23

    Can this business be run profitably? How much is it worth for the government to walk away from it? Wish they told us the earnings before tax + debt costs. This corp might need bankruptcy, and to be sold to another group with more capital... But if earnings don't cover expenses...

  • TR
    January 26, 2012 - 08:43

    Although it is nice to see the AG checking on our tax dollars, it would be nicer if he included details such as that provided by the govt. Interest expenses are high due to the line of credit but maybe they had no choice considering the lack of revenue. Also things get missed when you have a change of staff.