By Mike Kirby
Two years ago the Look Park endowment stood at nearly $10 million, now it has shrunk to around $5.8 million Where did all the money go?
The other day I talked to Brian Elliott, the outgoing park director, and he brought out the audited financial statements and the reports of their account administrator at Northbank.
It seems the park's trustees invested quite a bit of money where many of us invested our money in the go-go 1990s, in technology-oriented industries. Richard Covell, the former president of the failed Heritage Bank, is the trustee with the legal responsibility for the portfolio. A total of nearly 24 percent of the park's investments was in the corporate darlings of the information technology field such as Cisco, Intel, Microsoft, and Analog Devices. According to the board's latest financial report, 62.6 percent of the then $6.2 million portfolio was in stocks; 29.5 percent was in fixed income bonds, and 7.9 percent in short-term investments, money market or three-month Treasury notes. Their exposure in bonds was spread around, 30 percent in Treasury instruments, 22 percent in triple B rated bonds and percent in triple A bonds.
The significant news from the park's balance sheet, I think, was not what they invested in. The real hammering that the endowment is undergoing is from the deficits the park is running.
The decision to remodel the Garden House was an expensive one, involving a $1 million bank loan secured by the stock portfolio. Then there is $1 million plus in lost stock values, and $1.7 million in operating losses over the last three years. The park is living well-beyond its means. This last year the board spent $1.2 million to provide services, and the income from fees only covered about 41 percent of their costs. Every year their deficit is increasing. It was about $493,000 in l999; $545,000 in 2000; and $703,000 in 2001. The park has not broken even since l981, according to Elliott. It was new income from the Garden House that was supposed to cut the red ink, but its legal problems and the expense of the renovation have caused it to operate at a loss. The board seems to be keeping a high percentage of the park's investment portfolio in short-term notes because it has to keep dipping into the endowment to pay for park operating costs.
Elliott plans to leave the management of the park this month after 34 years as director, and is looking forward to retirement. But he is not sanguine about the park's future. He has told the whole staff that there will be no new hires and no new vehicles and equipment purchased until the deficit comes under control. What seems to be happening at Look Park is similar in some respects to what happened to Heritage Bank on Covell's watch.
During his stewardship at the bank he bet big on real estate development and authored all kinds of entrepreneurial ventures where bankers got involved in trying to run businesses, which all crashed. Similarly, at Look Park, the board and staff have become involved in launching a commercial enterprise - the Garden House - whose success might be able to stanch the flow of red ink.
Will it work and can the finances of the park be turned around? For now, the jury is out.
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