Audit outlines challenges for Millennium Youth Complex

The Office of the City Auditor has found numerous problems at the Millennium Youth Entertainment Complex in East Austin, starting with the city’s failure to effectively manage and monitor its agreements with the Austin Rosewood Community Development Corporation. The duties of the nonprofit ARCDC include oversight of the agreement with SMG, the for-profit company in charge of managing Millennium Complex operations. According to the audit, the ARCDC board has been ineffective and failed to operate in a unified manner, at least in fiscal years 2017-2019.

Auditors noted “strained relationships and a lack of trust between key players,” which have apparently impacted operations of the complex. In addition, in the past the city has not identified facility and technology maintenance needs, “which could result in reduced use of the facility, negative community perception, injury to patrons, and increased future maintenance costs.” Some community members also “perceived that the city has not worked hard enough to stop displacement in East Austin and has consistently underfunded” the Millennium Complex, according to the audit.

The stated mission of the Millennium Complex, which includes a bowling alley, a movie theater and a skating rink, “is to provide a safe, secure, and comfortable environment (free from drugs, gangs, crime, and violence) where families can enjoy a wide range of affordable, high-quality recreational and entertainment activities and attractions.”

According to the audit, the board of ARCDC failed to hold meetings on a regular basis and also failed to document any actions that might have been taken at those meetings. “ARCDC meeting records show that from calendar year 2012 to 2019, the ARCDC board held seven meetings. Only three of these meetings have formal minutes of the discussion. The meeting minutes did not show evidence that the board members discussed the performance of SMG,” the management company.

Auditors also reported that SMG “did not meet performance targets for revenue, attendance and activity expansions. Some performance expectations were not defined clearly enough to verify success. Community members noted additional barriers such as lack of affordability and limited days of operation, which could impact the community’s ability to use” the Millennium Complex.

Although the agreement with SMG requires it to submit periodic reports, including monthly performance reports and annual audit reports to the board, auditors found that the board did not review the reports submitted by SMG. The city is not a party to the agreement between ARCDC and the outside management company.

Auditors noted that there was approximately $500,000 in unmet needs in 2019, including repairs to the HVAC system, “equipment, technology, lighting, and items related to safety and security.” Failure to take care of such issues “may lead residents to believe that the city does not care about maintaining its facilities,” auditors noted.

The complex and convoluted relationship between the city, ARCDC and SMG adds another layer of difficulty to solving problems at the Millennium Complex. Auditors reported that the city built the Millennium Complex with an $8,875,000 U.S. Department of Housing and Urban Development loan. At the time of the loan, HUD required the city to form a board to receive the funding and manage construction of the facility. In order to satisfy those requirements, Austin City Council created the ARCDC in 1995. Auditors noted that according to city staffers, the city had fully paid back the loan to HUD in 2016. Staffers also told auditors there is currently no enforceable agreement between the city and ARCDC, since the previous agreement expired in September 2016.

However, Council appointed a new chair to ARCDC last September: Courtney Robinson, who attended last week’s virtual meeting and said the board is now “working diligently … to bring the Millennium back.” She added, “We recognize that the Millennium isn’t like any other city asset, and we can’t find a structure anywhere that is like this particular structure, but we do recognize that we have some funding challenges and we need to figure out how to bridge the gap and how to make our funding a little more equitable in terms of how we’re operating.”

Auditors made five recommendations to ensure that the Millennium Complex meets its mission and operates effectively. City management and management of the Parks and Recreation Department agreed to each of the recommendations. The first recommendation was that “the City Manager should evaluate the current governance structure. If the current structure is maintained, the City Manager should work with stakeholders to: (a) Clarify the expectations, roles and responsibilities of the City, PARD, ARCDC, and the Facility Manager; and (b) Communicate the responsibilities to all parties.”

Neha Sharma was the audit manager for this audit.

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