|Public Release Date: May 16, 1994||No. 94-23|
The Metropolitan Sports Facilities Commission is a component unit of the Metropolitan Council. As required by Minn. Stat. Section 473.595, Subd. 5, we have conducted an audit of the commission's financial statements for the year ended December 31, 1993. Based on our examination, we have concluded that the commission's financial statements are fairly stated in compliance with generally accepted accounting principles.
Due to concerns about commission investments, publication of these financial statements has been delayed for two weeks. As of December 31, 1993, the financial statements show commission investments at a value of $30,339,218. The commission's investments experienced a subsequent decline in market value, as explained in note 9 to the financial statements:
Between December 31, 1993 and the close of business on April 29, 1994, the Commission liquidated two of its investments for an aggregate loss of $1,750,241 and experienced a $413,500 decline in the aggregate market value of its remaining investments. Of the decline experienced, the portion related to investments with trustee was an unrealized loss of $279,000. The decline in value is primarily attributable to the sharp rise in interest rates during the months of March and April 1994 and its effect upon the U.S. Government securities market.
Because of its concerns with these losses, the commission is conducting a study of its investment management practices. It intends to complete the study shortly. We have decided to defer publishing our management letter pending completion of the commission's study. We expect to release the management letter next month.
The financial statements show total commission assets of over $105 million as of December 31, 1993. Nearly $73 million of property and equipment comprises the largest portion of commission assets; investments accounted for most of its other assets. The commission owed total liabilities of about $43 million, with $42 million representing principal and accrued interest on its long-term debt.
The financial statements show that the commission has equity of over $62 million: $17 million in contributed capital, $12 million restricted according to its bond covenants, almost $14 million designated by the commission for capital improvement projects and operating reserves, and $19 million of unrestricted retained earnings. Its equity was increased by net income of over $6 million for calendar year 1993. However, $5 million of the net income resulted from a one-time accounting adjustment from the Hockey Playing and Metropolitan Sports Area Use Agreement being terminated. This extraordinary gain is further explained in footnote 4 to the financial statements.