Minnesota Amateur Sports Commission 03-07

Office of the Legislative Auditor State of Minnesota
Financial Audit Division
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Senator Ann H. Rest, Chair

Legislative Audit Commission

Members of the Legislative Audit Commission

B.T. "Tom" Duffy, Chair

Minnesota Amateur Sports Commission

Members of the Amateur Sports Commission

Mr. Paul Erickson, Executive Director

Minnesota Amateur Sports Commission

 

We have conducted a special review of the Minnesota Amateur Sports Commission’s use of funds appropriated in 1998 to purchase and develop land for athletic fields and to develop the National Children’s Golf Course.

We conducted this review in response to a request from a member of the Minnesota Legislature who alleged that the commission unlawfully used part of its appropriation for development of a National Children’s Golf Course to buy land for soccer fields. In response to this concern, we agreed to examine the land purchase and how the commission used its athletic fields and golf course appropriations.

In addition to providing information about the 1998 appropriations, our report reinforces the need for the Legislature to clearly define its expectations in the law. It also reinforces the need for agencies to give primary consideration to the "letter of the law" rather than perceptions of legislative intent.

This report was prepared for the information of the Legislative Audit Commission and the Minnesota Amateur Sports Commission. This restriction is not intended to limit the distribution of the report, which was released as a public document on February 13, 2003.

 

James R. Nobles Claudia J. Gudvangen, CPA

Legislative Auditor Deputy Legislative Auditor

End of Fieldwork: January 28, 2003

Report Signed On: February 12, 2003

 

Table of Contents

Report Summary
Chapter 1. Introduction
Chapter 2. Use of State Appropriations
List of Attachments:
Attachment A: Letter from Representative Krinkie
Attachment B: Commission resolution dated December 21, 1998
Attachment C: Commission resolution dated February 25, 2002
Attachment D: Letter signed by Senator Langseth, and attested to by Bernie Omann, and Henry Kalis
Attachment E: Current map of the National Sports Center campus
Attachment F: Commission resolution dated January 27, 2003
Attachment G: Letter from the Office of the Attorney General
Attachment H: Capital Budget Plan 1998-2003
Attachment I: Former Governor Carlson’s press release
Attachment J: 1998 map of the National Sports Center campus
Attachment K: National Sports Center Foundation Contract with World Golf Foundation, Inc., through its division,
The First Tee
Minnesota Amateur Sports Commission’s Response

Audit Participation

The following members of the Office of the Legislative Auditor prepared this report:

Claudia Gudvangen, CPA Deputy Legislative Auditor David Poliseno, CPA, CISA, CFE Audit Manager Marla Conroy, CPA, CISA Director of InvestigationsLaura Peterson, CPA Team LeaderSonya Johnson, CPA Investigator

Exit Conference

The following representatives from the Minnesota Amateur Sports Commission and
the National Sports Center Foundation participated in the exit conference held on February 10, 2002.

Paul Erickson Executive Director, MASCKris Bjerkness Executive Director, NSCFWynn Babcock Director of Finance, NSCFNeil Ladd Golf Programs Manager, NSCF

Report Summary

We have conducted a special review of the Minnesota Amateur Sports Commission’s use of funds appropriated in 1998 to purchase and develop land for use as athletic fields and to develop the National Children’s Golf Course.

Our objective in conducting this special review was to identify how the commission spent a $1.7 million appropriation for athletic fields and a $3.1 million appropriation for development of the golf course and to determine whether those expenditures complied with appropriation laws and other legal requirements.

 

Key Conclusions

As of January 2003, the Amateur Sports Commission has expended virtually all of the state appropriations for athletic fields and the golf course. Determining whether those expenditures complied with appropriation laws depends on how broadly or strictly one reads the language and defines the specific words in the appropriation law. As auditors, our traditional approach in reviewing legal compliance relating to use of appropriated funds is to consider the "letter of the law." However, in the case of these appropriations, there was other evidence that brought into question the purpose or intent of the appropriation law, and we considered that evidence in making our judgments.

We have concluded that the commission’s use of the $1.7 million appropriation for the athletic fields did not comply with a strict reading of the appropriation language, but did comply with the intent of the two legislative conference committee chairs who negotiated the final language in the conference committee.

We think a conclusion on whether the commission’s expenditures from the golf course appropriation complied with legal requirements will ultimately depend on how the commission uses the land that it purchased with $1.867 million from the appropriation. Although the commission has not yet built the golf course, current designs include a 9-hole learning center on the land in question. We think the appropriation language directing the commission to "develop" a golf course, as well as the commission’s general authority to acquire real property, and the fact that the final appropriation language did not specifically prohibit the purchase of land, together, can support the commission’s actions and its use of the appropriation.

 

Chapter 1. Introduction

In April 1998, the Minnesota Legislature appropriated to the Minnesota Amateur Sports Commission $1.7 million to purchase and develop land for use as athletic fields and $3.1 million to develop the National Children’s Golf Course. As of January 2003, although the golf course appropriation has been expended, the golf course is not complete. This has raised various concerns and questions about the status of the project.

In December 2002, State Representative Philip Krinkie reported to our office a possible unlawful use of public funds by the Amateur Sports Commission. Specifically, he reported that the commission had apparently used a significant portion of the $3.1 million appropriation designated for the golf course to purchase land for soccer fields (Attachment A).

In response to these concerns, we agreed to examine the land purchase and how the commission used its youth golf course appropriation. Our review did not evaluate the merits of constructing a golf course or the specific golf course design.

This special review went beyond the work conducted as a part of our financial audit of the Amateur Sports Commission for the three years ending June 30, 2001. Our report on the results of that audit was issued on August 22, 2002. While the audit reviewed commission expenditures generally, it did not focus specifically on these projects, and it did not include a detailed review of all National Sports Center Foundation accounting records and supporting documentation.

Objective and Methodology

Our objective in conducting this special review was to answer the following questions:

How did the commission expend the $1.7 million appropriation for athletic field land and the $3.1 million appropriation for development of the National Children’s Golf Course?

Did the commission comply with applicable appropriation laws and other legal requirements in the use of funds appropriated for development of the National Children’s Golf Course?

In conducting this review, we examined the Amateur Sports Commission and National Sports Center Foundation’s accounting records related to expenditures from the $1.7 million and $3.1 million appropriations. We reviewed relevant supporting documents, including the purchase agreement for land acquisition. We interviewed staff of the Amateur Sports Commission and the National Sports Center Foundation. We obtained information from legislators involved in passage of the appropriation law. We also obtained information from representatives of the Office of the Attorney General, Senate Counsel, the Metropolitan Airports Commission (MAC), and the World Golf Foundation, Inc., a Florida not-for-profit corporation, through its division, The First Tee.

Chapter 2 provides an accounting of the use of 1998 appropriations to the Amateur Sports Commission for athletic fields and the golf course. It also provides a historical perspective on development of the athletic fields and golf course and our comments on legal compliance. In reaching conclusions on compliance, we considered the concept of "legislative intent." We discuss this concept and our interpretation of the relevant legal requirements in the chapter.

As an overview, the following section provides background information on the Minnesota Amateur Sports Commission, the National Sports Center, and the National Sports Center Foundation.

Overview of Entities

The 1987 Legislature created the Minnesota Amateur Sports Commission, which operates under Minn. Stat. Chapter 240A. Its mission is to "evaluate the economic and social benefits of amateur sports to enrich the lives of Minnesotans." The commission has provided financial support to programs and facilities located both in the Twin Cities area and in greater Minnesota, including the National Volleyball Center in Rochester, the National Hockey Center in St. Cloud and the Giants Ridge Golf and Ski Resort in Biwabik. The commission also administers the Mighty Ducks and Mighty Kids grant programs.

Pursuant to Minn. Stat. Section 240A.02 (2002), the commission consists of fourteen voting members and four nonvoting members. The Governor appoints ten voting members, the commission appoints two, and the Speaker of the House of Representatives and Senate Majority Leader each appoint one. The four nonvoting members are legislators, two from each house. (Also, historically, the two voting members appointed by the Speaker of the House and Senate Majority Leader have been legislators.) The commission holds monthly meetings that are open to the public.

Paul Erickson was appointed the commission’s first executive director in September 1987 and continues to serve in that capacity. The Legislature has provided General Fund appropriations for the Minnesota Amateur Sports Commission’s general operations. In addition, the commission has received funding for various capital projects.

The commission has statutory authority to acquire real or personal property by lease, purchase, or gift and to own, operate, construct, and repair or refurbish property for amateur sports facilities. The commission’s expanded contracting authority allows it to contract for materials, supplies, and equipment to perform the functions of architect, engineer, construction manager, project manager, or contractor for facility building or remodeling projects.

The Minnesota Amateur Sports Commission is housed at the National Sports Center campus in Blaine. The state owns the National Sports Center land and facilities. The National Sports Center campus is designed to support various athletic events including soccer, track and field, cycling, hockey, and golf. The commission contracts with the National Sports Center Foundation, a separate nonprofit organization, to operate the National Sports Center facilities.

The foundation also manages the construction of any new facilities. For facility development, the foundation receives charitable contributions and funding from the commission, as well as revenue from program and event registration fees, dormitory and facility rentals, and food and beverage sales.

 

Chapter 2. Use of State Appropriations

On April 21, 1998, Governor Arne Carlson signed House File No. 3843, a bill that provided various appropriations for capital projects. As is the nature of capital appropriations, unless the law specified otherwise, the appropriations were available until the individual projects were completed or abandoned. (The availability of funds is limited somewhat by Minn. Stat. Section 16A.642, which provides for a biennial legislative review of unobligated funds for projects authorized more than four years prior to the year of the review.)

The appropriation bill, which became Laws of Minnesota 1998, Chapter 404, included various appropriations to the Amateur Sports Commission, in Section 15. Subd. 2 of that section provided the following:

$1,700,000 is to purchase and develop land adjacent to the National Sports Center in Blaine for use as athletic fields.

$3,100,000 is to develop the National Children’s Golf Course. The primary purpose of the National Children’s Golf Course is to serve youth of 18 years and younger. Market rates must be charged for adult golf.

As of January 2003, the Amateur Sports Commission had expended virtually all of the two appropriations. As discussed previously, the National Sports Center Foundation operates the Sports Center and manages the construction of new facilities. The foundation enters into contracts and initiates purchase transactions for various goods and services. The commission used the state appropriated funds to reimburse the National Sports Center Foundation for costs incurred for the two projects. In addition, the foundation may expend certain of its own revenues for other costs related to these state-funded projects. Tables 2-1 and 2-2 provide additional detail on the use of the appropriated funds by the National Sports Center Foundation.

 

Table 2-1
Expenditures from the $1.7 Million Appropriation
Land Acquisition for Athletic Fields

Uses of Funds

     1999     

    2000    

  2001  

   2002   

   2003   

     Total     

Land Purchase (1)

$ 603,003

 

$ 0

   

$ 603,003

Land Improvement (2)

639,373

$252,882

 

$ 2,662

$10,383

905,300

Engineering (3)

37,617

3,904

 

8,988

12,463

62,972

Environmental

8,847

9,126

     

17,973

Electrical

 

15,821

     

15,821

Taxes (4)

 

67,337

     

67,337

Fee (5)

       

11,564

11,564

Other (6)

3,054

5,800

0

0

140

8,995

Total

$1,291,895

$354,870

$ 0

$11,650

$34,550

$1,692,964

Notes:

  1. The National Sports Center Foundation (NSCF) entered into a $2.5 million contract for deed to purchase approximately 75.2 acres. The 1999 land purchase expenditure represents earnest money, the first installment under the purchase agreement, and closing fees. The commission reimbursed the NSCF for the remaining installment from its golf appropriation.
  2. Land improvements included excavation, parking lots, curb, gutter, drainage, picnic shelters, and bridge installation.
  3. NSCF hired an engineering company as project managers for the land improvements.
  4. These expenditures include the real estate, special assessment, and green acre taxes due as specified in the land purchase agreement.
  5. These expenditures include permit, zoning, and conditional use application fees.
  6. These expenditures include an appraisal of a right-of-way and legal and consulting services.

Source: National Sports Center Foundation Invoices.

Table 2-2
$3.1 Million Appropriation

National Children’s Golf Course

Uses of Funds

   1999   

    2000   

    2001   

     2002     

   2003  

     Total     

Land Purchase (1)

 

$600,000

$500,000

$ 767,242

 

$1,867,242

Construction (2)

$67,003

228,299

27,801

10,814

$1,598

335,515

Engineering (3)

39,185

64,100

8,317

19,850

21,710

153,162

Environmental

3,698

       

3,698

Equipment-Golf Carts

 

21,619

 

151,204

 

172,823

Equipment-Lawn Maintenance

 

15,543

7,781

399,043

 

422,367

Equipment-Other

 

5,560

5,099

28,867

2,265

41,791

Payroll

 

39,592

15,855

8,873

 

64,320

Supplies

 

13,592

5,971

 

472

20,035

Other (4)

0

8,486

1,626

8,656

251

19,019

Total

$109,886

$996,791

$572,450

$1,394,549

$26,296

$3,099,972

Notes:

  1. The National Sports Center Foundation (NSCF) entered into a $2.5 million contract for deed to purchase approximately 75.2 acres. These expenditures represent the remaining installment under the purchase agreement. The commission reimbursed the NSCF for the first installment from its land acquisition appropriation. All together the commission reimbursed the foundation $2.47 million for the land. In an amendment to the purchase agreement, the sellers agreed to reduce the purchase price by $25,000 due to environmental cleanup costs. In addition, the foundation paid the last installment early and received a $7,758 discount.
  2. These expenditures include construction of the 18-hole putting course and clubhouse.
  3. NSCF hired an engineering company as project managers for the National Youth Golf Center project.
  4. These expenditures include fees, land improvements, travel, insurance, and professional/technical services.

Source: National Sports Center Foundation Invoices.

As authorized by resolutions in December 1998 (Attachment B) and February 2002 (Attachment C), the commission used a portion of each of the appropriations to reimburse the foundation for the cost of a land purchase. In December 1998, the foundation entered into a purchase agreement for 75.2 acres of sod farmland at a cost of approximately $2.5 million. The foundation closed on the land purchase in April 1999 and paid for the purchase in four installments from 1999 through 2002. Neither the commission nor the foundation obtained an appraisal of the property prior to the purchase. The commission’s executive director stated the commission and foundation had knowledge of property values in the area based on previous acquisitions. Prior to purchasing the land, the commission obtained recent property sales information from the City of Blaine for comparison purposes. In response to the current criticism, the commission, in January 2003, obtained an independent appraisal of the 75.2-acre property, which was valued at $3.4 million.

When reimbursing the foundation for the land purchase, the commission used $600,000 from the athletic field appropriation and $1.9 million from the golf course appropriation. The commission used 27 acres of the property for 12 soccer fields and allocated 48 acres to be developed for golf. The commission used the value of the acreage designated for athletic fields and golf when determining the share of land costs charged to each appropriation. Commission staff stated that, based on soil tests, the athletic field acreage contained more peat and was less valuable than the acres designated for golf activities.

Determining Legal Compliance

Reaching a conclusion on whether the commission’s expenditures from these appropriations complied with appropriation laws is complicated. A conclusion on compliance depends on how broadly or strictly one reads the language and defines the specific words in the appropriation law. For the appropriations in question, there have been differing interpretations of the meaning of certain words (such as "to develop") and the amount of flexibility provided to the commission to achieve the ultimate purpose of the appropriation.

The commission and its supporters have taken a generally broad definition of the 1998 appropriation law and its authority. Others say the commission should be held to a stricter interpretation. As auditors, our traditional approach in reviewing legal compliance relating to use of appropriated funds is to consider the "letter of the law." However, in the case of these appropriations, there was other evidence that brought into question the purpose or intent of the appropriation law. For example, we received a letter (Attachment D) signed by Senator Keith Langseth, Chair of the Senate Capital Investment Committee in 1998 (and currently), and attested to by Bernie Omann, Chief of Staff to then-Governor Arne Carlson (and a current member of the Amateur Sports Commission), and Henry Kalis, Chair of the House Capital Investment Committee in 1998. The letter stated that their intent in developing the appropriation language was to provide maximum flexibility for the commission in developing the two projects.

From our research into the relevant legislative history, we learned that the language in Laws of Minnesota 1998, Chapter 404, related to the Amateur Sports Commission, differed from the language in the original appropriation bills introduced in the House of Representatives and the Senate. Changes were made as the two bills progressed through the two houses and, finally, through negotiations in the conference committee. Table 2-3 provides a comparison of House and Senate action on the bills.

It is interesting to note that the commission’s use of appropriated funds was fairly consistent with the final language adopted by the House in House File No. 3843, which was referred to the conference committee. The bill, at that point, provided, in part:

$1,800,000 from the general fund is for the purchase and development of land to expand the National Sports Center in Blaine and development of athletic fields.

$2,000,000 from the general fund is for purchase and development of land for the National Children’s Golf Course in Blaine.

The Senate position going into the conference committee included $1.2 million for the athletic fields and no funding for the golf course. If the language from the House position had carried forward to the final bill adopted by the conference committee, there would be little basis to question the commission’s actions. However, in addition to the appropriation dollar amounts changing, the specific language in the appropriation bill also changed. The reference to expanding the National Sports Center in Blaine was eliminated from the athletic fields’ appropriation, and the reference to purchasing land was eliminated from the golf course appropriation. It is not necessarily surprising that there have been questions about legislative intent in making those changes.

We found little independent documentation or public record to explain the reason for the change in language as a result of conference committee action. It does not appear that there was public testimony relating to the final language adopted by the conference committee. Commission Executive Director Paul Erickson told us that, in conjunction with the conferees and Senate Counsel, he made suggestions regarding the specific language to be included in the appropriation law, and that his objective was to provide as much flexibility as possible for the commission. That explanation of legislative intent is consistent with the information received by our office in the letter from Senator Langseth.

We discuss the issue of compliance in more detail in the following sections, which describe the two projects.

The Athletic Fields

The final appropriation language relating to the athletic fields provided that the commission could "purchase and develop land adjacent to the National Sports Center" for use as athletic fields. A conclusion on the propriety of some of the land development expenditures from the athletic fields’ appropriation depends on how literally one interprets the language of the appropriation law. A question could be raised whether all of the development had to occur on the newly purchased land. In actuality, the majority of expenditures made by the commission was for development on land adjacent to the new parcel and not on the specific land purchased in December 1998.

 

Table 2-3

Legislative History

Land Acquisition and

National Children’s Golf Course

HF

Date

House of Representatives

SF

Date

Senate

2502

Introduced 1/22/1998

Bill did not provide funding for land acquisition or a children’s golf course.

2183

Introduced 1/22/1998

Bill did not provide funding for land acquisition or a children’s golf course. Bill referred to the Government Operations Affairs Committee where it apparently died without a vote.

2502

1st Engrossment

2/9/1998

House Government Operations Committee amended the bill as follows:

$2 million from the General Fund is for purchase and development of land for the National Children’s Golf Course in Blaine.

$1 million from the General Fund is for grants for development or improvement of facilities or programs to improve access to golf for economically disadvantaged youth.

$1.8 million from the General Fund is for the purchase and development of land to expand the National Sports Center in Blaine and development of athletic fields.

3374

Introduced

2/24/1998

Bill appropriated funds for building projects for several state agencies and provided the following:

$1.2 million is to purchase land adjacent to the National Sports Center in Blaine for use as athletic fields.

$2.5 million is to purchase land for the National Children’s Golf Course in Blaine.

The bill was referred to the State Government Finance Committee. No formal action was taken on the bill.

3843

Introduced 3/11/1998

1st Engrossment

3/12/1998

HF 2502 combined with other capital improvement bills into HF 3843, the Omnibus Bonding Bill as follows:

$2 million from the General Fund is for purchase and development of land for the National Children’s Golf Course in Blaine.

$1 million from the General Fund is for grants for development or improvement of facilities or programs to improve access to golf for economically disadvantaged youth.

$1.8 million from the General Fund is for the purchase and development of land to expand the National Sports Center in Blaine and development of athletic fields.

3388

Introduced 2/27/1998

Omnibus Buildings Bonding Appropriations Bill incorporated items from SF 3374 and other appropriations bills and provided the following:

$1.2 million is to purchase land adjacent to the National Sports Center in Blaine for use as athletic fields.

No funds were provided for the children’s golf course or golf programs for economically disadvantaged youths.

3843

Passed 3/12/1998

The bill passed the House on a vote 96-37 and was sent to the Senate for action.

3388

Passed

3/5/1998

The bill passed the Senate on a vote of 45-22.

       

3/13/1998

Senate passed HF 3843 on a vote of 41-22 after deleting everything in the bill and replacing it with the title and text of SF 3388.

 

3/16/1998

House does not concur with the Senate changes and requests a conference committee. House conferees included Representatives Kalis, Solberg, Trimble, K. Clark, and Bishop.

 

3/17/1998

Senate accedes to conference committee request. Senate conferees included Senators Langseth, Berglin, Cohen, Laidig, and Janezich.

 

4/6/1998

Capital Budget Conference Committee reached agreements in areas where the House and Senate versions of H.F. 3843 differed, no funding provisions for the various projects were adopted. House language was adopted for the purchase and development of land for the National Children’s Golf Course in Blaine. (Senate Briefly dated 4/15/1998.)

 

4/6/1998

Capital Budget Conference Committee reached agreements in areas where the House and Senate versions of H.F. 3843 differed, no funding provisions for the various projects were adopted. House language was adopted for the purchase and development of land for the National Children’s Golf Course in Blaine. (Senate Briefly dated 4/15/1998.)

3843

4/9/1998

 

 

 

2nd Engrossment

A request to return bill to conference committee failed. House adopted the conference committee report and passed the bill 86-47 as follows:

$1.7 million is to purchase and develop land adjacent to the National Sports Center in Blaine for use as athletic fields.

$3.1 million is to develop the National Children’s Golf Course.

3843

4/9/1998

 

 

 

2nd Engrossment

Senate adopted conference committee report and passed the bill 46-21, as follows:

 

$1.7 million is to purchase and develop land adjacent to the National Sports Center in Blaine for use as athletic fields.

$3.1 million is to develop the National Children’s Golf Course.

3843

4/21/1998

Governor signed the bill.

     

Note: The appropriation bills, as referenced in the table, exclude non-financial supplemental language.

 

 

The commission spent $1.1 million from the $1.7 million land appropriation on land development. In June 1998, six months prior to entering into the land purchase agreement and ten months prior to closing on the purchase, the National Sports Center Foundation entered into a contract with Park Construction Company to complete various work on the Sports Center site. The foundation paid the construction company $895,000. As of December 1998, when the foundation signed the purchase agreement for the new land, Park Construction had already completed over 70 percent of the work outlined in the contract. The majority of the work was done on existing soccer fields and areas around the ice arena. The contract identified the following work to be completed:

The commission bought the land adjacent to the existing soccer fields with the intent of joining the two properties. As a result, the commission spent $757,000 of the $895,000 on the combined property, rather than solely on the new fields. Prior to purchasing the sod farm, the commission performed soil samples and determined that it was more cost effective to enhance the existing soccer fields with parking, curbs and gutters, and picnic shelters. The commission believed this resulted in the best use of the two properties and allowed them to maximize the number of soccer fields. The commission constructed footbridges to join the two properties.

The commission believed it had the authority to use the land appropriation to enhance all property north of the original National Sports Center campus. Attachment E shows a map of the campus. The commission staff interpreted the phrase "land adjacent to the National Sports Center" to include all land located north of the original campus (i.e., the new purchase of 75.2 acres and an additional 80 acres purchased in the mid-1990’s). A strict reading of the appropriation language could lead to the conclusion that the appropriation was to be used to develop only the new land.

In addition, according to the project engineer, work with an estimated cost of $138,000 was completed on property around the ice arena and adjacent fields, and not on the athletic fields north of the original campus. When the commission reimbursed the foundation for the Park Construction contract, it did not segregate the costs between work performed on the soccer fields from that conducted at the ice arena. The commission staff felt it was not cost effective to separately account for these costs. Rather, the commission explained that the foundation provided $343,000 worth of equipment, irrigation systems, and administrative services related to the soccer fields that the commission did not reimburse. The commission asserts that the $343,000 contribution by the foundation offset the $138,000 worth of work completed around the ice arena. Although the commission believed that in the end it spent $1.7 million for its intended purposes, we think that a proper accounting of costs is required. The commission should only have charged those expenditures to the designated appropriation that complied with the language of the law.

On the question of legislative intent, as the letter from Senator Langseth shows, those involved in final passage of the appropriation bill said:

"…we specifically intended that the improvements shall be on both the newly acquired property and existing NSC property in order to tie the new properties to the entire campus. (We have reviewed the NSC site plan – and have reviewed the 1.7 and 3.1 appropriation; the location of land acquisition and improvements are consistent with our intent.)"

While providing this flexibility was the intent of those legislators and of the commission, that intent was not clearly evident from a strict reading of the appropriation law.

The Golf Course

The commission has used the golf course appropriation to purchase land and equipment and to construct an 18-hole putting course. The putting course, which opened in 2000, is the only component of the golf facilities that is completed.

Purchase of Land

We think a conclusion on whether the commission’s expenditures from the golf course appropriation complied with legal requirements will ultimately depend on how the commission uses the land that it purchased with $1.867 million from the appropriation. When the commission purchased the 75.2 acres of sod farmland in 1998, it allocated the cost for approximately 48 acres to the golf course appropriation. If the land is used for the golf course, we think it is reasonable to conclude that the expenditures comply with the appropriation law. (Although the commission has not yet built the golf course, current designs include a 9-hole learning center on the land in question. On January 27, 2003, the Amateur Sports Commission passed a resolution (Attachment F) that reaffirmed the delineation of sod farm land between the athletic fields and the golf course.) We think the appropriation language directing the commission to "develop" a golf course, as well as the commission’s general authority to acquire real property, and the fact that the final appropriation language did not specifically prohibit the purchase of land, together, can support the commission’s actions and its use of the appropriation.

We recognize that not everyone will reach the same conclusion on use of the golf course appropriation, and that our conclusion is based on a broader definition of the word "develop" than some would allow. Stating that the expenditures complied with the specific appropriation language does not necessarily mean that the expenditures were consistent with the understanding or intent of individual legislators or even specific legislative committees.

There certainly is evidence that some individual legislators had different interpretations of the meaning and significance of the specific appropriation language as it related to the commission’s flexibility. The letter from Senator Langseth states that the Legislature specifically used the words "to develop" for both the athletic fields and golf course projects in order to provide the agency "all the means necessary" to complete a sports facility, including land acquisition. However, Representative Krinkie has questioned whether the commission had authority to purchase land since the appropriation language did not specifically authorize such action. He references the fact that the language for the $1.7 million appropriation authorized the commission to "purchase and develop land," while the language for the $3.1 million appropriation authorized the commission to "develop" the golf course, inferring that there was different legislative intent. We agree that the differentiation in this language raises questions. In addition, the Office of the Attorney General (Attachment G) has said that the fact that the appropriation language changed during the legislative process may create a compelling argument that the Legislature intended to further limit use of the appropriation. Although these questions are raised, we found no evidence to support a conclusion that the Legislature had a common and well defined intent when identifying restrictions on use of these appropriations.

The Amateur Sports Commission must bear some responsibility for the controversy that has developed regarding use of these appropriations. This golf course project has taken much longer than anyone anticipated. The course completion date has been pushed back at least five times. In addition, the commission has made numerous changes in the golf course design and has not been consistent in its presentations and documentation regarding what the golf course will include and where it will be located.

The plans and designs for the golf course project have changed as the project has evolved. The final Capital Budget Plan for 1998-2003 (Attachment H), revised in the fall of 1997, included land acquisition and site development for the golf course. Similarly, a December 1997 press release from the office of former Governor Arne Carlson (Attachment I) announced plans for a 27-hole championship golf course and discussed a $3 million proposal for land acquisition and site development. However, in February 1998, when testifying on an early version of the appropriation bill in the Senate, the commission’s executive director said that the commission would not need to purchase land to build the golf course, because they anticipated that the Metropolitan Airports Commission (MAC) would provide sufficient land through a lease arrangement. In addition, some commission maps distributed to the Legislature showed the entire amount of purchased land used for soccer fields and a 27-hole golf course on the leased land (Attachment J). We think it would have been prudent for the commission to report back to the Legislature when its plans changed and it decided it needed to purchase additional land to complete the golf course project.

We think two events ultimately prompted the commission to use the golf course appropriation to purchase land. First, the property to be leased from MAC had wetland mitigation issues that limited the amount of available acreage and made it difficult for the commission to design the entire course on the leased property. In addition, the purchase price for the sod farm increased significantly from what the commission had anticipated paying. When the price escalated to $2.5 million, the commission decided to fund a portion of the land purchase from the National Children’s Golf Course appropriation.

Purchase of Equipment

Questions also have been raised about the commission’s purchase of a significant amount of equipment from the golf course appropriation in 2002, even though the golf course has not yet been constructed. The commission expended $636,981 on various equipment, including golf and utility carts, a beverage cart, mowers, and tractors.

Opening the 18-hole putting course in 2000 prompted acquisition of some of the equipment at that time. However, the National Sports Center Foundation purchased approximately 91 percent of the equipment, including 32 golf carts, in early 2002. Foundation staff said that they purchased the equipment because of significant discounts available through its contractual arrangement with The First Tee (Attachment K), entered into in February 2000. The foundation did not follow a formal Request for Bid process when purchasing equipment. For the golf carts, the foundation obtained The First Tee contract vendor’s price and solicited one additional verbal bid from another vendor. In our August 2002 report (Report #02-54) on an audit of the commission, we recommended that the commission work with the National Sports Center Foundation to develop formal policies and procedures for procuring capital project contractors and materials.

The foundation did receive a substantial discount when it purchased the golf and utility carts in 2002. It is unknown whether the commission could have negotiated the same discounts at a later date.

Nearly all of the equipment purchased with the golf course appropriations has been used, even though the golf course facility is not completed. Executive Director Erickson explained that the golf carts were purchased primarily for golf course operations; however, they may be used for secondary purposes to gain operating efficiencies at the National Sports Center. The National Sports Center used the golf carts in July 2002 during the Schwans USA Cup, the nation’s largest youth soccer tournament. National Sports Center personnel estimated 80 hours of use on each cart during the soccer tournament. Other golf utility vehicles, purchased in 2000, had approximately 800 hours of use. National Sports Center personnel said that they use these vehicles extensively on the 18-hole putting course for maintenance purposes. The mowers and tractors have also been used to maintain the putting course and the sod farm property.

We think it is reasonable that in a large facility like this, equipment would be shared among activities in order to save money and provide efficiencies. However, the primary use of equipment should relate to its funding source. In this case, equipment purchased from the golf course appropriation should be used primarily for golf course activities. By purchasing and using the equipment before the golf course facilities are constructed, the commission runs a risk that the equipment will be damaged or lose value by the time the golf course is operational.

Golf Course Delays

Probably the strongest criticism of this project relates to the fact that almost five years after the appropriation was authorized, the golf course facility is not completed. When the project was first discussed in a December 1997 press release, it was anticipated that construction would begin in 1998 and that the course would open in 2000. However, there have been numerous project delays.

According to the representatives of the Metropolitan Airports Commission (MAC), the golf course construction was delayed by the approval and permitting process. Certain approvals were necessary for construction and use of the leased property, including the Federal Aviation Administration’s (FAA) Concurrent Use of Property approval, an environmental assessment, and wetland mitigation.

MAC staff told us that the Amateur Sports Commission was not familiar with the various permit processes, especially those unique to aviation related property, and underestimated the time frame needed to obtain the necessary approvals. Although a lease for the land was executed in June 2002, the MAC is currently waiting for environmental approval from the FAA before it approves the project and construction of the golf course can begin. In January 2003, MAC officials estimated that the environmental assessment process would be completed in March 2003.

The commission has a three-phase plan for completing the project. During Phase I, the commission, using the $3.1 million golf course appropriation, acquired the sod farmland and maintenance buildings, renovated the maintenance buildings, completed the 18-hole putting course, and established a preliminary range (general practice area). Phase II of the project, to be completed by 2005, includes the 18-hole course (partial opening scheduled in 2004), and the driving range. Phase III of the project, to be completed between 2004-2006, includes a clubhouse, learning center (9-hole short course), completion of the practice areas, and final landscaping.

In October 2002, the foundation published a Request for Qualifications (RFQ) for construction companies interested in constructing a golf facility at the National Sports Center. The foundation received nine responses and has prequalified four companies to submit proposals. The foundation plans to have a construction contract executed by spring 2003.

The commission currently estimates that the total cost of the National Children’s Golf course will be approximately $8.6 million. This total project cost includes the in-kind value of the land leased from the Metropolitan Airports Commission, estimated at $2 million, and the value of the course design provided through The First Tee contract, estimated at $1 million. The remaining costs will be funded from other commission or foundation revenues. Currently, the foundation has written cash commitments totaling $1.3 million and verbal commitments of $1.2 million. The foundation should ensure that any benefits provided to sponsors providing cash commitments comply with provisions of the appropriation law relating to access to the National Children’s Golf Course. The sponsor contracts should stipulate that the primary purpose of the National Children’s Golf Course is to serve youth, and that market rates must be charged for adult golf.

 

Recommendations

1. The Amateur Sports Commission should give greater weight to the "letter of the law" when implementing appropriations, and not rely on its perception of legislative intent.

2. When there are significant changes in the scope or timing of its projects, the Amateur Sports Commission should formally report back to the appropriate legislative committees and, when necessary, obtain approval for the changes by amending the law that originally authorized the project.

3. The Amateur Sports Commission should establish stronger accounting controls to ensure that costs paid from restricted appropriations are directly related to the project authorized by law and the conditions specified in law.