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HomeMy WebLinkAbout11-22-04 WSi City Council Work Session Monday, November 22, 2004 5:00 PM Marion Conference Room, City Hall ITEM #1 -King Park Ice Arena Discussion • Recap of Schoo/Board Meeting/ Review Recent Discussions with Deve%per Mayor Johnson stated that City Administrator Steve Mielke and Council Member Wendy Wulff were present at the School Board meeting when the Ice Arena was discussed. This project is supported in concept by the School Board, although some questions remain. City Administrator Steve Mielke prepared some various options for discussion. In an effort to proceed on a 50/50 shared responsibility basis, the City Attorney has begun working on a Joint Powers Agreement (JPA) with the School District. The JPA would allow for an independent agency to be formed with representation from the City and the School for the purpose of taking over the ice operations from the LCC for a third sheet of ice. as well as the two existing sheets. The School Administration has endorsed that plan and presented that recommendation at the School Board's work session last • week. A super-rink proposal was recently introduced to the School Board by a firm that is constructing a similar facility in Cudahy, WI. Sportscomm representative Scott Branaven attended Tuesday's School Board meeting and outlined their vision, which did not include any market or financial data. Sportscomm was informed at the meeting that the use of Tax Increment Financing for this type of a project would not be legal in Minnesota. The School Board voted 3-3 not to have any further discussions on the JPA for 30 days, at which time Sportscomm would present their findings. Several members of the School Board wished to pursue that possibility, at least for the 30 days. The proposal will be addressed at their December 14t" meeting. The School Board is aware that their lack of action could cause the City to look at other options. Mayor Johnson recommends the Council consider several options, since the developer has stated that he would not proceed with the project without the ice arena. Several options were prepared by the City Administrator, based on whether the City would partner with the school, complete the project alone, or partner with the developer. • The City owns additional land on the site and needs to determine what to do with . the land as the project moves forward. There are several possibilities including selling it for residential development, preserving it for future use, developing more fields, etc. City of Lakeville Work Session Minutes -November 22, 2004 Page 2- • There is a potential of outsourcing the management of the arenas. They are currently being managed by the LCC and if a third sheet is added, the options include staying with them, going with a different partner, or bringing it in-house. • Staff feels an advisory committee for ice operations will be necessary so that all users will have a voice. The Joint Powers Agreement assumes the LCC is still interested in being involved and are on the advisory committee. Discussions will be held with the LCC. • ISD #194 needs to determine their needs for bleachers, locker rooms, etc. because it will affect the bond and the debt. The $6.8 million bond is projected with a 750-seat facility, however the School District is concerned that that will be inadequate, and may determine as many as 2,000 seats will be needed for large events. This is certain to increase the amount of the bond. • The School District is under contract with the City to rent 140 hours of ice at Ames Arena until 2014, but actually rent 370 hours, which is adequate for the needs of one high school. It is anticipated that with the opening of the new school the needs will double. Cation lA - 50/50 Joint Powers Agreement between the City and School District Assumes a Joint Powers Agreement where City and School jointly manage and control, . and share in the construction and maintenance costs. The City would act as the fiscal agent, and would most likely do the hiring of the personnel. • Pros: Both agencies share the risk on the budget; the debt service; operations and maintenance policy. There is a high potential for user support for both swimming and hockey. • Cons: Control would also be shared and the City would give up some authority with a JPA. There are some concerns whether the School Board shares a common mission and philosophy with the City, or if they would promote the interests of the school as opposed to the entire community. Option 1B. 60/40 Joint Powers Agreement Several possibilities exist for the fifth JPA member. Under a 60/40 Joint Powers Association, the City would appoint the fifth JPA member and be 60% responsible for the finances. • Pros: The City would have more influence on the JPA and would be able to control the membership of the advisory group. There is a high probability of user support. • Cons: Additional construction costs for the City; greater risk for net operating losses. An addition annual cost of $50,000 would be incurred to pay the debt, in addition to 60% of any shortages. While a 60/40 split gives • the School an economic break, it might make them feel as though the City controls their destiny. City of Lakevi/le Work Session Minutes -November 22, 2004 Page -3- Option 2A -City Builds Arena with No Agreement If the City moves forward without an agreement with the School District, several variations of these options could be formulated. If there is no agreement in advance, the City assumes control of both arenas; the KPAC agreement for water and ice would be maintained, and the City would offer an agreement to the school district for use of the pool and the ice. The difference is that the City would finance the construction of the arena, sell the excess land to pay half of the construction; and finance the other half. The district would pay $245,000 to the City for access to both - $195,000 for the ice, $50,000 for the pool. Both would be required and there would be additional usage charges, at least for the ice. Operations would be the City's responsibility, either outsourced or in-house. • Pros: The City would be in control of the ice sheets. The current operations memo of understanding would stay in effect, except the City would assume management from LCC and the City would control rates and budget. It would be operated as a community facility with an advisory committee formed, and ISD #194 would share the costs. • Cons: Debt service would be against the City only. The $245,000 essentially replaces the district's debt service. If the district chooses .not to participate with this payment, their program hours would be unavailable. • Option 2B -City Builds Arena with Agreement Finance Director Dennis Feller explained that under this option, the risk to the City would not be significantly greater. City staff is recommending that the JPA be done with the 60/40 split. The risk is shared on the debt and the operations. There is a $30- 50,000 annual operating loss built into the budget, but Dennis Feller stated that he is not concerned that will be the case. He feels there is a reasonable expectation that the School District will be compelled to rent in their own community, rather than somewhere else, because it will be in their best interest and there is no other facility that has enough time available to meet their needs. Option 3 -City/Developer Partner with Aareement The developer has offered to partner with the City, or modify some responsibilities in the agreement with KPAC. In this scenario the City would proceed to build the arena and take control of all three sheets. Half of the construction costs would be borrowed from the developer and half would come from the sale of the remaining land. This would be very similar to bonding, with some financing. If this were the case, the pool requirements would be reduced, which should result in some compensation to the City. They in turn could rent pool time to the School District. The City also has the option of a resolution that the arena will be built with or without the School District's support. Roger Knutson feels there is a need to have the documents prepared by the time the School Board's decision is made in mid-December so the project can proceed from that point without delays. City of Lakeville Work Session Minutes -November 22, 2004 Page -4- • The main decision faced by the Council is whether to proceed with the arena if the School District determines that they will not cooperate with the City on its construction. Council Members Rieb and Wulff would proceed without the school; Luick was undecided; Bellow stated he was willing to continue discussions on Option 2a, however he feels the Council's hands are tied politically because the School Board has to come to a decision. If the City proceeds, he feels the school would not be satisfied with a 750- seat facility, so politically questions whether that would be a good decision. He would lean more towards Option 2a. Mayor Johnson stated that the School could put in as many seats as they want; they just need to pay the difference. Steve Mielke added that the seating capacity is flexible, to a certain extent, and should not be the deal- breaker. Council Member Bellows wants the School to feel they have made the decision on their own, without it being forced on them. Option 3 would involve reduction of the pool requirements. Council Member Wulff stated that the school needs more pool time, as well as a good quality pool with a diving well. KPAC will likely install a scaled down version of the pool if the school doesn't participate in the project. Steve Mielke suggested a letter be sent to the School Board recapping the actions they have already taken and asking them to complete the documents so that they can be ready for signature by the end of December. The School should be aware that without the documents prepared, the City would assume that they are not interested in participating and proceed with other options. In addition, they would have no assurances that something would be built. If by their December 14th meeting there is not a decision to participate with the City, the possibility exists for the City to withdraw from the process. Council Members directed City Administrator Steve Mielke to work with City Attorney Roger Knutson on preparing a letter to the School Board specifying the City's position and, if necessary, eventual alternatives, should an agreement not be reached, and asking them to direct their staff to prepare the agreement documents for signature. Motion to adjourn was made by Rieb, seconded by Wulff. Motion passed unanimously. R eetFt~rfly--s~ , Steven C. Mielke City Administrator SCM/jrh