SALINAS — Monterey County’s parks officials have been tapping restricted fund accounts from the Quagga mussel program and trailer fire insurance proceeds to cover Lake Nacimiento cost overruns for years in the hopes that the resort operation would eventually make enough money to replenish the funds.
On Tuesday, the bill came due as the Board of Supervisors agreed to devote $963,633 in dwindling county general fund contingencies to cover the restricted fund spending as county Resource Management Agency officials acknowledged the resort operation likely won’t realize a profit for years to come, blaming the impact and aftermath of the COVID-19 pandemic.
In all, the county board approved $1.43 million for the Lake Nacimiento enterprise fund, including the restricted fund spending and a $470,279 loss for the 2019-20 fiscal year, which county officials also blamed on the pandemic’s impact.
That leaves the county with about $840,000 in contingencies with the cost of the pandemic and the trio of wildfires that struck the area this summer remaining to be fully realized.
While agency officials indicated the practice had been ongoing for years and they had notified other county officials, including county supervisors, county board chairman Chris Lopez said this was the first he’d heard of it. Lopez said the board took the responsible action in replenishing the restricted funds while also making it clear it did not want to see such a practice continue.
Supervisor Mary Adams cast the lone dissenting vote in a 4-1 tally, expressing concern about devoting so much of the county’s contingency budget to the resort operation as well as the practice of using restricted account funds to cover resort operations.
Resource Management Agency Finance Manager Jessica Cordiero-Martinez explained that while the fund accounts were restricted, the cash in them was not, allowing them to be spent. She added that the fund accounts would need to eventually be replenished.
Cordiero-Martinez told the county board that agency officials had been notifying county officials including the county budget committee for years that the restricted funds were being spent to cover cost overruns even though the spending had not been included in regular annual subsidy requests for the lakes resort operations.
She acknowledged that the agency had struggled early on to manage the resort operations after taking over the county parks department, and that helped prompt the cost overruns and the need to tap the restricted funds, although agency assistant director Shawne Ellerbee told The Herald the practice pre-dated the agency’s takeover.
Cordiero-Martinez told the county board on Tuesday that agency officials felt the separation of the Lake Nacimiento resort from the Lake San Antonio, a new contract with Nacimiento resort manager Basecamp, and an improving understanding of the resort business would result in at least a small profit to help start replenishing the restricted funds. But she said it became clear once the pandemic arrived and started affecting the resort business that was not likely to happen in the next 3-5 years and the decision was made to request county general funds to cover the debt.
Asked by Adams why the staff report indicated that the restricted funds were “inadvertently” used, Cordiero-Martinez did not specifically address that, saying only the practice was “not ideal” and “not the way we wanted to go.” But Ellerbee told The Herald that using inadvertently was a “poor choice of words,” and the restricted funds were intentionally spent.
For the current fiscal year, Cordiero-Martinez said projections indicated the Lake Nacimiento resort could lose about $360,000 under what she called a “worst-case scenario” based on the level of operations, but it could also realize a small profit.
Purchased by the county in 2007 as part of a settlement agreement with previous lakes resort operator WaterWorld, both the Lake Nacimiento and Lake San Antonio resort operations have required millions of dollars in annual subsidies since then, and have never turned a profit, although Nacimiento has always done better financially of the two.
