Financials of Edina’s enterprise operations featured in StarTribune article

An article by Mary Jane Smetanka in the StarTribune today titled Cities weigh services that don’t pay their way includes quotes from Edina Mayor Jim Hovland & Council member Josh Sprague.

Edina has hired a consultant to examine the operations of the city’s Art Center and the indoor Edinborough Park, both of which recoup less than 80 percent of their cost… "It’s a question of whether the model still works," said Edina City Council member Josh Sprague. "I’m quite sure a business couldn’t run at 75 percent efficiency." But Edina Mayor Jim Hovland said that view holds community features like art centers and pools to an unfair standard. "Business is designed to make a profit; government is designed to deliver a service," he said. "These were never designed to make a profit; they were intended as a benefit to residents."

…

Sprague, the City Council member, believes operations that were intended to be self-supporting should have a set goal for cost recovery. "If they can’t achieve 90 percent of cost recovery, then perhaps they should not be in operation or they should be merged with others," he said.

If all enterprise operations met that standard this year, he said, the city could have shifted municipal liquor store profits to the city’s general fund to avoid a tax increase. Sprague said he wants the enterprises to be successful, but that a more creative approach than just raising fees and cutting staffing needs to be taken. "Once we get the consultants’ evaluation, we can break out of this box we’ve been in and the path will be clearer," Sprague said. "But in the interim, we cannot continue to subsidize these at this level. It’s not sustainable."

Hovland agrees that enterprise operations need to be more efficient. But he bristles at the idea that they should function as businesses do. He said cities run things like ice arenas at a loss because residents want them but businesses can’t make a profit from them. "We need to figure out reasonable performance expectations," Hovland said. "But what do we do if they don’t make a profit? Are you going to shut down Braemar, or the Art Center? "These are the things that people think are important to the fabric of the community."