2015-04-13 STMA Ice Arena Board Packetoily of
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STMA ARENA BOARD AGENDA
MONDAY, APRIL 13, 2015
ALBERTVILLE CITY HALL
6:00 PM
1. CALL TO ORDER — ROLL CALL
2. ADOPT AGENDA
3. ANNUAL AUDIT PRESENTED BY MATT MAYER (KDV) (pgs. 1-49)
4. APPROVAL OF THE MINUTES OF MARCH 9, 2015 (pgs. 50-52)
5. FINANCE REPORTS
a) Approve the March list of claims as presented in the amount of $24,916.38 and March
report (pgs. 53-56)
6. ARENA MANAGER
a) Monthly report (pgs. 57-58)
7. NEW BUSINESS
8. OLD BUSINESS
a) Discussion 2015 Preliminary Budget and Rates (pg. 59)
9. YOUTH HOCKEY ASSOCIATION
10. ADJOURN
M:\Public Data\Arena\2015 STMA Ice Arena\2015 Arena Agendas\2015-04-13 STMA Ice Agenda\04132015 STMA Agenda.doc
St. Michael - Albertville Ice Arena
Albertville, Minnesota
For the Year Ended
December 31, 2014
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ST. MICHAEL - ALBERTVILLE ICE ARENA
ALBERTVILLE, MINNESOTA
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED
DECEMBER 31, 2014
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ST. MICHAEL - ALBERTVILLE ICE ARENA
ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
FOR THE YEAR ENDED DECEMBER 31, 2014
INTRODUCTORY SECTION
Appointed Officials
Page No.
FINANCIAL SECTION
Independent Auditor's Report 9
Management's Discussion and Analysis 13
Basic Financial Statements
Government -wide Financial Statements
Statement of Net Position
20
Statement of Activities
21
Fund Financial Statements
Governmental Funds
Balance Sheet
24
Statement of Revenues, Expenditures and Changes in Fund Balances
25
General Fund
Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
26
Notes to the Financial Statements
27
OTHER REQUIRED REPORT
Independent Auditor's Report on Minnesota Legal Compliance
39
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INTRODUCTORY SECTION
ST. MICHAEL - ALBERTVILLE ICE ARENA
ALBERTVILLE, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2014
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ST. MICHAEL - ALBERTVILLE ICE ARENA
APPOINTED OFFICIALS
FOR THE YEAR ENDED DECEMBER 31, 2014
I:1190111►11 D111
Name
Title
Appointed by
Jeff Lindquist
Chair
ISD 885
Gayle Weber
Member
ISD 885
Kevin Kasel
Member
St. Michael
Chris Schumm
Member
St. Michael
Dan Wagner
Member
Albertville
Larry Sorensen
Member
Albertville
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FINANCIAL SECTION
ST. MICHAEL - ALBERTVILLE ICE ARENA
ALBERTVILLE, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2014
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YDV
Expert advice. When you need it.5'
INDEPENDENT AUDITOR'S REPORT
Chair and Members
of the Ice Arena Board
St. Michael — Albertville Ice Arena
Albertville, Minnesota
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and each major
fund of the St. Michael — Albertville Ice Arena, Albertville, Minnesota, as of and for the year ended
December 31, 2014 and the related Notes to the Financial Statements, which collectively comprise the
Organization's basic financial statements as listed in the Table of Contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the
Organization's preparation and fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the Organization's internal control. Accordingly, we express no such opinion. An
audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall presentation of
the financial statements.
Expert advice. When you need it. sm
Certified Public Accountants
Wealth Management
Payroll Services
Business Valuations
Technology Services
St. Cloud
220 Park Avenue S.
P.O. Box 1304
St. Cloud, Minnesota
56302
Phone: 320.251.7010
Fax: 320.251.1784
Twin Cities
3800 American Boulevard W.
Suite 1000
Minneapolis, Minnesota
55431
Phone: 952.563.6800
Fax: 952.563.6801
www.kdv.com
Toll Free
877.912.7696
Technology Help Desk
866.400.6426
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KD-V
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities and each major fund of the St. Michael —
Albertville Ice Arena, Albertville, Minnesota, as of December 31, 2014, and the respective changes in
financial position thereof and the budgetary comparison for the General Fund for the year then ended in
accordance with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's
Discussion and Analysis, which follows this report letter, be presented to supplement the basic financial
statements. Such information, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board who considers it to be an essential part of financial reporting
for placing the basic financial statements in an appropriate operational, economic or historical context.
We have applied certain limited procedures to the required supplementary information in accordance
with auditing standards generally accepted in the United States of America, which consisted of inquiries
of management about the methods of preparing the information and comparing the information for
consistency with management's responses to our inquiries, the basic financial statement, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Report on Summarized Comparative Information
The financial statements include partial prior year comparative information. Such information does not
include all the information required to constitute a presentation in accordance with accounting principles
generally accepted in the United States of America. Accordingly, such information should be read in
conjunction with the Organization's financial statement for the year ended December 31, 2013, from
which such partial information was derived.
We have previously audited the Organization's 2013 financial statements and our report, dated April 7,
2014, expressed unmodified opinions on the respective financial statements of the governmental
activities and each major fund. In our opinion, the summarized comparative information presented
herein as of and for the year ended December 31, 2013, is consistent, in all material respects, with the
audited financial statements from which it has been derived.
KERN, DEWENTER, VIERE, LTD.
Minneapolis, Minnesota
April 7, 2015
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Management's Discussion and Analysis
As management of the St. Michael - Albertville Ice Arena of Albertville, Minnesota, (the Organization), we offer readers of the
Organization's financial statements this narrative overview and analysis of the financial activities of the Organization for the fiscal
year ended December 31, 2014.
Financial Highlights
• The assets of the Organization exceeded its liabilities at the close of the most recent fiscal year by $1,707,785 (net position).
Of this amount, $183,592 (unrestricted net position) may be used to meet the Organization's ongoing obligations to citizens
and creditors.
• The Organization's total net position increased $179,335. This increase is attributable to contributions from member
organizations for the dehumidification system improvement on the arena.
• As of the close of the current fiscal year, the Organization's governmental funds reported combined ending fund balances of
$187,016, a decrease of $34,942 in comparison with the prior year. Fund balance of $182,272 is available for spending at the
Organization's discretion but a portion has been assigned for specific purposes.
• At the end of the current fiscal year, unassigned fund balance for the General fund was $136,555, or 39 percent of total
General fund 2014 expenditures.
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Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the Organization's basic financial statements. The
Organization's basic financial statements comprise three components: 1) government -wide financial statements, 2) fund financial
statements, and 3) notes to the financial statements. This report also contains other supplemental information in addition to the basic
financial statements themselves.
The financial statements also include notes that explain some of the information in the financial statements and provide more detailed
data. The statements are followed by a section of supplementary information which further explain and support the information in the
financial statements. Figure 1 shows how the required parts of this annual report are arranged and relate to one another.
Figure 1
Required Components of the
Organization's Annual Financial Report
...............................................................................
Management's Basic Required
Discussion and Financial Supplementary
Analysis Statements Information
Government- Fund Notes to the
wide Financial Financial Financial
Statements Statements Statements
Summary 0 0 Detail
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Figure 2 summarizes the major features of the Organization's financial statements, including the portion of the Organization
government they cover and the types of information they contain. The remainder of this overview section of management's discussion
and analysis explains the structure and contents of each of the statements.
Figure 2
Major features of the Government -wide and Fund Financial Statements
Government -wide Statements
Governmental Funds
Scope
Entire Organization government (except
The activities of the Organization that are not
fiduciary funds) and the Organization's
proprietary or fiduciary, such as police, fire and parks
component units
Required financial
. Statement of Net Position
• Balance Sheet
statements
. Statement of Activities
• Statement of Revenues, Expenditures, and
Changes in Fund Balances
Accounting Basis and
Accrual accounting and economic resources
Modified accrual accounting and current financial
measurement focus
focus
resources focus
Type of asset/liability
All assets and liabilities, both financial and
Only assets expected to be used up and liabilities that
information
capital, and short-term and long-term
come due during the year or soon thereafter; no
capital assets included
Type of deferred
All deferred outflows/inflows of resources,
Only deferred outflows of resources expected to be
outflows/inflows of
regardless of when cash is received or paid
used up and deferred inflows of resources that come
resources information
due during the year or soon thereafter; no capital
assets included
Type of in flow/out flow
All revenues and expenses during year,
Revenues for which cash is received during or soon
information
regardless of when cash is received or paid
after the end of the year; expenditures when goods or
services have been received and payment is due
during the year or soon thereafter
Government -wide financial statements. The Government -wide financial statements are designed to provide readers with a broad
overview of the Organization's finances, in a manner similar to a private -sector business.
The statement of net position presents information on all of the Organization's assets and liabilities, with the difference between the
two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial
position of the Organization is improving or deteriorating.
The statement of activities presents information showing how the Organization's net position changed during the most recent fiscal
year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing
of related cashflows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in
future fiscal periods.
The government -wide financial statements start on page 20 of this report.
Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. The Organization, like other state and local governments, uses fund accounting to
ensure and demonstrate compliance with finance -related legal requirements. All of the funds of the Organization are governmental
funds.
Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities
in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund
financial statements focus on near -term inflows and outflows of spendable resources, as well as on balances of spendable resources
available at the end of the fiscal year. Such information may be useful in evaluating a government's near -term financing
requirements.
Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the
information presented for governmental funds with similar information presented for governmental activities in the government -wide
financial statements. By doing so, readers may better understand the long-term impact by the government's near -term financing
decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in
fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.
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The Organization maintains two individual governmental funds. Information is presented separately in the governmental fund balance
sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General fund and Capital
Improvement fund.
The Organization adopts an annual appropriated budget for its General fund. A budgetary comparison statement has been provided
for the General fund to demonstrate compliance with this budget.
The basic governmental fund financial statements start on page 24 of this report.
Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data
provided in the government -wide and fund financial statements. The notes to the financial statements start on page 27 of this report.
Government -wide Financial Analysis
As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the
Organization, assets exceeded liabilities by $1,707,785 at the close of the most recent fiscal year.
By far, the largest portion of the Organization's net position (89 percent) reflects its investment in capital assets (e.g., land, buildings,
machinery and equipment). The Organization uses these capital assets to provide services to citizens; consequently, these assets are
not available for future spending.
St. Michael - Albertville Ice Arena's Summary of Net Position
Current and other assets
Capital assets
Total assets
Long-term liabilities outstanding
Other liabilities
Total liabilities
Net position
Net investment in capital assets
Unrestricted
Total net position
Governmental Activities
Increase
2014 2013 (Decrease)
$ 202,313 $ 249,629 $ (47,316)
1,524,193 1,306,492 217,701
1,726,506 1,556,121 170,385
3,424 - 3,424
15,297 27,671 (12,374)
18,721 27,671 (8,950)
1,524,193 1,306,492 217,701
183,592 221,958 (38,366)
$ 1,707,785 $ 1,528,450 $ 179,335
The remaining balance of unrestricted net position $183,592 may be used to meet the Organization's ongoing obligations to citizens
and creditors. At the end of the current fiscal year, the Organization is able to report positive balances in all categories of net position.
Governmental activities. Governmental activities increased the Organization's net position $179,335. Significant changes from the
prior year are noted below:
• Capital grants and contributions increased $199,344 which mostly related to contributions from member organizations for the
dehumidification system improvement on the arena.
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St. Michael - Albertville Ice Arena's Changes in Net Position
Revenues
Program revenues
Charges for services
Capital grants and contributions
General revenues
Unrestricted investment earnings
Total revenues
Expenses
Culture and recreation
Change in net position
Net position, January 1
Net position, December 31
Financial Analysis of the Government's Funds
Governmental Activities
Increase
2014 2013 (Decrease)
$ 312,802 $ 329,927 $ (17,125)
229,344 30,000 199,344
3,226 (1,378) 4,604
545,372 358,549 186,823
366,037 372,737 (6,700)
179,335 (14,188) 193,523
1,528,450 1,542,638 (14,188)
$ 1,707,785 1 $ 1,528,450 $ 179,335
As noted earlier, the Organization uses fund accounting to ensure and demonstrate compliance with fmance-related legal
requirements.
Governmental funds: The focus of the Organization's governmental funds is to provide information on near -term inflows, outflows
and balances of spendable resources. Such information is useful in assessing the Organization's financing requirements. In particular,
unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal
year.
As of the end of the current fiscal year, the Organization's governmental funds had combined ending fund balances of $187,016, a
decrease of $34,942 in comparison with the prior year. Approximately 24 percent of this total amount, $45,717, constitutes assigned
fund balance, which is available for spending at the Organization's discretion but assigned for specific purposes. The remainder of
fund balance is unassigned ($136,555) and nonspendable ($4,744).
The General fund is the chief operating fund of the Organization. At the end of the current year, the fund balance of the General fund
was $141,299. The fund balance of the Organization's General fund decreased $30,863 during the current fiscal year.
The Capital Improvement fund balance decreased $4,079, for an ending fund balance of $45,717. Each member of the Organization
contributes money for future capital needs.
General Fund Budgetary Highlights
The Organization's General fund budget was not amended during the year. The budget called for an increase in fund balance of
$1,763. The actual activity of the General fund resulted in a decrease of $30,863.
Revenues exceeded the budget by $18,908. The largest revenue variances consisted of miscellaneous revenues being over budget by
$5,353 and ice rental charges being over budget by $11,219. These variances are mostly due to advertising revenues and more than
anticipated ice rental fees.
Expenditures were over budget by $51,535. This was mostly due to capital expenditures for the ice arena dehumidification system
improvement.
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Capital Asset
Capital assets: The Organization's investment in capital assets for its governmental activities as of December 31, 2014, amounts to
$1,524,193 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements, machinery
and equipment. The increase from the prior year relates to the installation of the new dehumidification system in the arena.
Additional information on the Organization's capital assets can be found in Note 3B on page 34 of this report.
Land
St. Michael - Albertville Ice Arena's Capital Assets
(net of depreciation)
Governmental Activities
2014
$ 102,000
Increase
2013 (Decrease)
$ 102,000 $ -
Buildings 1,389,425 1,169,638 219,787
Improvements other than buildings 15,378 15,929 (551)
Machinery and equipment 17,390 18,925 (1,535)
Total $ 1,524,193 $ 1,306,492 $ 217,701
Long-term liabilities
St. Michael - Albertville Ice Arena's Long-term Liabilities
Beginning Ending Due Within
Balance Increases Decreases Balance One Year
Governmental activities
Compensated
absences payable $ - $ 6,409 $ (2,985) $ 3,424 $ 2,568
Additional information on the Organization's long-term liabilities can be found in Note 3D starting on page 35 of this report.
Economic Factors and Next Year's Budgets and Rates
The Organization is a joint powers organization comprised of the City of Albertville, City of St. Michael and Independent School
District 885. The Organization strives to maintain reasonable and competitive rates, sufficient to fund operations. The Organization
has several primary parties that rent the ice time at the facility. These groups include, but are not limited to, the STMA High School
and the local youth hockey association, STMA Youth Hockey Association, Inc.
Other key economic factors are as follows:
• Ice rental rates were not increased in September 2014. Rental rate increases for 2015 are being considered.
• There continues to be an annual shortage of the prime ice available for rentals during the typical hockey season.
• The 2015 budget will be adopted on the premise that utility costs will be higher due to the new dehumidification system
installed in 2014. Building repairs, maintenance, and capital outlay are anticipated to be lower than the previous year due to
the significant repairs made in 2014 to extend the life of the facilities and equipment.
Requests for Information
This financial report is designed to provide a general overview of the Organization's finances for all those with an interest in the
Organization's finances. Questions concerning any of the information provided in this report or requests for additional financial
information should be addressed to the Finance Director, City of Albertville, 5959 Main Avenue, Albertville, Minnesota 55301.
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GOVERNMENT -WIDE FINANCIAL STATEMENTS
ST. MICHAEL - ALBERTVILLE ICE ARENA
ALBERTVILLE, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2014
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ST. MICHAEL - ALBERTVILLE ICE ARENA
STATEMENT OF NET POSITION
DECEMBER 31, 2014
Governmental
Activities
ASSETS
Cash and temporary investments
$ 105,028
Accounts receivable
42,040
Due from other governments
50,501
Inventory
4,744
Capital assets
Land
102,000
Depreciable assets, net of accumulated depreciation
1,422,193
TOTAL ASSETS 1,726,506
LIABILITIES
Accounts payable 13,258
Accrued salaries payable 2,039
Compensated absences payable - due within one year 2,568
Compensated absences payable - due in more than one year 856
TOTAL LIABILITIES 18,721
NET POSITION
Net investment in capital assets 1,524,193
Unrestricted 183,592
TOTAL NET POSITION $ 1,707,785
The notes to the financial statements are an integral part of this statement.
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ST. MICHAEL - ALBERTVILLE ICE ARENA
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 2014
Net (expenses)
Revenues and
Changes in
Program Revenues Net Position
Operating Capital Grants
Charges for Grants and and Governmental
Functions/Programs Expenses Services Contributions Contributions Activities
Governmental activities
Culture and recreation $ 366,037 $ 312,802 $ - $ 229,344 $ 176,109
General revenues
Unrestricted investment earnings 3,226
Change in net position 179,335
Net position, January 1 1,528,450
Net position, December 31 $ 1,707,785
The notes to the financial statements are an integral part of this statement.
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FUND FINANCIAL STATEMENTS
ST. MICHAEL - ALBERTVILLE ICE ARENA
ALBERTVILLE, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2014
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ST. MICHAEL - ALBERTVILLE ICE ARENA
BALANCESHEET
GOVERNMENTAL FUNDS
DECEMBER 31, 2014
ASSETS
Cash and temporary investments
Accounts receivable
Due from other governments
Due from other funds
Inventory
TOTAL ASSETS
LIABILITIES
Accounts payable
Accrued salaries payable
Due to other funds
TOTAL LIABILITIES
FUND BALANCES
Nonspendable for inventory
Assigned for future capital acquisitions
Unassigned
TOTAL FUND BALANCES
TOTAL LIABILITIES AND FUND BALANCES
Total fund balance reported above
Amounts reported for the governmental activities in the statement
of net position are different because
Capital assets used in governmental activities are not financial
resources and therefore are not reported as assets in governmental funds.
Cost of capital assets
Less: accumulated depreciation
Total
Capital
Governmental
General
Improvement
Funds
$ 105,028
$ -
$ 105,028
42,040
-
42,040
-
50,501
50,501
4,784
-
4,784
4,744
-
4,744
$ 156,596
$ 50,501
$ 207,097
$ 13,258
$ -
$ 13,258
2,039
-
2,039
-
4,784
4,784
15,297
4,784
20,081
Long-term liabilities, including bonds payable, are not due and payable in the
current period and therefore are not reported as liabilities in the funds.
Long-term liabilities at year-end consist of
Compensated absences payable
Total net position - governmental activities
The notes to the financial statements are an integral part of this statement.
4,744 - 4,744
- 45,717 45,717
136,555 - 136,555
141,299 45,717 187,016
$ 156,596 $ 50,501 $ 207,097
$ 187,016
2,335,318
(811,125)
(3,424)
$ 1,707,785
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ST. MICHAEL - ALBERTVILLE ICE ARENA
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2014
REVENUES
Charges for services
Interest on investments
Miscellaneous
TOTAL REVENUES
EXPENDITURES
Current
Culture and recreation
Capital outlay
Culture and recreation
TOTAL EXPENDITURES
NET CHANGE IN FUND BALANCES
FUND BALANCES, JANUARY 1
FUND BALANCES, DECEMBER 31
Total change is fund balances
Amounts reported for governmental activities in the statement
of activities are different because
General
Total
Capital Governmental
Improvement Funds
$ 295,449 $ - $ 295,449
2,657 569 3,226
17,353 229,344 246,697
315,459 229,913 545,372
306,380 - 306,380
39,942 233,992 273,934
346,322 233,992 580,314
(30,863) (4,079) (34,942)
172,162 49,796 221,958
$ 141,299 $ 45,717 $ 187,016
Capital outlays are reported in governmental funds as expenditures. However, in the statement of
activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense.
Capital outlays
Depreciation expense
Some expenses reported in the statement of activities do not require the use of current financial resources
and, therefore, are not reported as expenditures in the governmental funds.
Compensated absences
Change in net position - governmental activities
The notes to the financial statements are an integral part of this statement.
$ (34,942)
269,115
(51,414)
(3,424)
$ 179,335
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ST. MICHAEL - ALBERTVILLE ICE ARENA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET TO ACTUAL
FOR THE YEAR ENDED DECEMBER 31, 2014
(With comparative actual amounts for the year ended December 31, 2013)
Budgeted Amounts
Original Final
REVENUES
Charges for services
Ice rental
$ 249,450
Concessions
33,000
Vending machines
1,100
Skate sharpening
500
Total
Interest on investments
Miscellaneous
Other
TOTAL REVENUES
EXPENDITURES
Current
Culture and recreation
Supplies
Contracted services
Utilities
Other services and charges
Total current expenditures
Capital outlay
Culture and recreation
TOTAL EXPENDITURES
NET CHANGE IN FUND BALANCES
FUND BALANCES, JANUARY 1
FUND BALANCES, DECEMBER 31
284,050
2014
Actual
Amounts
Variance with Actual
Final Budget Amounts
$ 249,450
$ 260,669 $
11,219
266,314
33,000
31,442
(1,558)
31,470
1,100
962
(138)
1,115
500
2,376
1,876
1,964
284,050
295,449
11,399
300,863
500
500
2,657
2,157
(1,174)
12,000
12,000
17,353
5,353
29,064
296,550
296,550
315,459
18,909
328,753
16,050
16,050
21,041
(4,991)
7,489
154,425
154,425
167,038
(12,613)
147,430
93,900
93,900
103,211
(9,311)
105,068
15,412
15,412
15,090
322
14,108
279,787
279,787
306,380
(26,593)
274,095
15,000
15,000
39,942
(24,942)
51,028
294,787
294,787
346,322
(51,535)
325,123
1,763
1,763
(30,863)
(32,626)
3,630
172,162
172,162
172,162
-
168,532
$ 173,925
$ 173,925
$ 141,299
$ (32,626) $
172,162
The notes to the financial statements are an integral part of this statement.
-26- STMA Arena Board Mtg 04/13/15 Page 30
ST. MICHAEL - ALBERTVILLE ICE ARENA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting entity
St. Michael - Albertville Ice Arena (the Organization) was created under a joint powers agreement between the City of
St. Michael, the City of Albertville, and the Independent School District No. 885. The agreement was for the
construction and maintenance of a qualified ice arena.
The Board consists of six regular members, two from each member of the Organization. Each member is also part of the
City Council or Board of Education.
The Organization has considered all potential units for which it is financially accountable, and other organizations for
which the nature and significance of their relationship with the Organization are such that exclusion would cause the
Organization's financial statements to be misleading or incomplete. The Governmental Accounting Standards Board
(GASB) has set forth criteria to be considered in determining financial accountability. These criteria include appointing a
voting majority of an organization's governing body, and (1) the ability of the primary government to impose its will on
that organization or (2) the potential for the organization to provide specific benefits to, or impose specific financial
burdens on the primary government. The Organization does not have any component units.
B. Government -wide and fund financial statements
The goal of government -wide financial statements is to present a broad overview of the Organization's finances.
The basic statements that form the government -wide financial statements are the statement of net position and the
statement of activities. The two statements report information on all of the non -fiduciary activities of the Organization.
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset
by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment.
Amounts reported as program revenues include 1) charges to customers or applicants who purchase, use, or directly
benefit from goods, services or privileges provided by a given function or segment and 2) grants and contributions that
are restricted to meeting the operational or capital requirements of a particular function or segment. Other items not
properly included among program revenues are reported instead as general revenues.
Major individual governmental funds are reported as separate columns in the fund financial statements.
-27- STMA Arena Board Mtg 04/13/15 Page 31
ST. MICHAEL - ALBERTVILLE ICE ARENA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
C. Measurement focus, basis of accounting and financial statement presentation
The government -wide financial statements are reported using the economic resources measurement focus and the
accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred,
regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all
eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources measurement focus and the
modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.
Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to
pay liabilities of the current period. For this purpose, the Organization considers revenues to be available if they are
collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is
incurred, as under accrual accounting.
Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is
recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the
year in which the resources are measurable and become available.
Non -exchange transactions, in which the Organization receives value without directly giving equal value in return,
include grants, entitlement and donations. Revenue from grants, entitlements and donations is recognized in the year in
which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which
specify the year when the resources are required to be used or the year when use is first permitted, matching
requirements, in which the Organization must provide local resources to be used for a specified purpose, and expenditure
requirements, in which the resources are provided to the Organization on a reimbursement basis. On a modified accrual
basis, revenue from non -exchange transactions must also be available before it can be recognized.
Unearned revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Grants and
entitlements received before eligibility requirements are met are also recorded as unearned revenue.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
The Organization reports the following major governmental funds:
The General fund is the Organization's primary operating fund. It accounts for all financial resources of the
Organization, except those required to be accounted for in another fund.
The Capital Improvement fund accounts for future capital acquisitions and other capital improvements.
As a general rule, the effect of interfund activity has been eliminated from government -wide financial statements.
When both restricted and unrestricted resources are available for use, it is the Organization's policy to use restricted
resources first, then unrestricted resources as they are needed.
-28- STMA Arena Board Mtg 04/13/15 Page 32
ST. MICHAEL - ALBERTVILLE ICE ARENA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
D. Assets, liabilities, and net position/fund balance
Deposits and investment
The Organization's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term
investments with original maturities of three months or less from the date of acquisition.
Cash balances from all funds of the City of Albertville are pooled and invested, to the extent available, in certificates of
deposit and other authorized investments. The Organization's balances are maintained in a separate fund within the
City's financial statements. Earnings from such investments are allocated on the basis of applicable participation by
each of the funds.
The Organization may also invest idle funds as authorized by Minnesota statutes, as follows:
1. Direct obligations or obligations guaranteed by the United States or its agencies.
2. Shares of investment companies registered under the Federal Investment Company Act of 1940 and received
the highest credit rating, rated in one of the two highest rating categories by a statistical rating agency, and have
a final maturity of thirteen months or less.
3. General obligations of a state or local government with taxing powers rated "A" or better; revenue obligations
rated "AA" or better.
4. General obligations of the Minnesota Housing Finance Agency rated "A" or better.
5. Bankers' acceptances of United States banks eligible for purchase by the Federal Reserve System.
6. Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest quality
category by at least two nationally recognized rating agencies, and maturing in 270 days or less.
7. Repurchase or reverse repurchase agreements and securities lending agreements with financial institutions
qualified as a "depository" by the government entity, with banks that are members of the Federal Reserve
System with capitalization exceeding $10,000,000, a primary reporting dealer in U.S. government securities to
the Federal Reserve Bank of New York, or certain Minnesota securities broker -dealers.
8. Guaranteed Investment Contracts (GIC's) issued or guaranteed by a United States commercial bank, a domestic
branch of a foreign bank, a United States insurance company, or its Canadian subsidiary, whose similar debt
obligations were rated in one of the top two rating categories by a nationally recognized rating agency.
The Organization does not have an investment policy that addresses interest rate and credit risk.
Accounts receivable
Accounts receivable include amounts billed for services provided before year end and are expected to be collected.
Therefore, there has been no allowance for doubtful accounts established.
Inventory
The inventory in the General fund is stated at FIFO (first -in, first -out) cost and consists of expendable supplies held for
consumption. The cost is recognized as an expenditure at the time the individual inventory items are used (consumption
method).
-29- STMA Arena Board Mtg 04/13/15 Page 33
ST. MICHAEL - ALBERTVILLE ICE ARENA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Capital assets
Capital assets, which include property, plant, equipment and infrastructure assets are reported in the applicable
governmental -type activities columns in the government -wide financial statements. Capital assets are defined by the
Organization as assets with an estimated useful life of more than one year and an initial individual cost of more than the
following:
Category
Cost
Land/land improvements
$ 10,000
Other improvements
25,000
Infrastructure
100,000
Buildings
25,000
Building improvements
25,000
Vehicles
5,000
Other equipment
5,000
Intangible assets
10,000
The Organization reports infrastructure assets on a network and subsystem basis. Accordingly, the amounts spent for the
construction or acquisition of infrastructure assets are capitalized and reported in the government -wide financial
statements regardless of their amount.
In the case of initial capitalization of general infrastructure assets (i.e., those reported by governmental activities) the
Organization chose to include items dating back to June 30, 1980. The Organization was able to estimate the historical
cost for the initial reporting of these assets through back trending (i.e., estimating the current replacement cost of the
infrastructure to be capitalized and using an appropriate price -level index to deflate the cost to the acquisition year or
estimated acquisition year). As the Organization constructs or acquires capital assets each period, including
infrastructure assets, they are capitalized and reported at historical cost. The reported value excludes normal
maintenance and repairs which are essentially amounts spent in relation to capital assets that do not increase the capacity
or efficiency of the item or extend its useful life beyond the original estimate. In the case of donations the Organization
values these capital assets at the estimated fair value of the item at the date of its donation.
Property, plant and equipment will be depreciated using the straight-line method over the following estimated useful
lives:
Useful Lives
Assets
in Years
Land improvements
5 to 30
Infrastructure
15 to 50
Buildings
15 to 40
Vehicles
3 to 15
Other Equipment
3 to 20
Compensated absences
It is the Organization's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All
vacation and sick pay is accrued when incurred in the government -wide and proprietary fund financial statements. A
liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of
employee resignations and retirements.
-30- STMA Arena Board Mtg 04/13/15 Page 34
ST. MICHAEL - ALBERTVILLE ICE ARENA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Postemployment benefits other than pensions
In August 2004, the Governmental Accounting Standards Board (GASB) issued Statement No. 45, Accounting and
Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, effective for the Organization's
fiscal year 2009. Statement No. 45 requires accrual -based measurement, recognition and disclosure of other
postemployment benefits (OPEB) expense, such as retiree medical and dental costs, over the employees' years of
service, along with the related liability, net of any plan assets. The Organization has no plans that would result in an
OPEB liability and, therefore, the Organization anticipates it will not incur any future explicit or implicit OPEB costs for
its employees and, therefore, no liability will be recorded.
Fund balance
In the fund financial statements, fund balance is divided into five classifications based primarily on the extent to which
the Organization is bound to observe constraints imposed upon the use of resources reported in the governmental funds.
These classifications are defined as follows:
Nonspendable - Amounts that cannot be spent because they are not in spendable form, such as inventory.
Restricted - Amounts related to externally imposed constraints established by creditors, grantors or contributors; or
constraints imposed by state statutory provisions.
Committed - Amounts constrained for specific purposes that are internally imposed by formal action (resolution) of
the Ice Arena Board, which is the Organization's highest level of decision -making authority. Committed amounts
cannot be used for any other purpose unless the Ice Arena Board modifies or rescinds the commitment by resolution.
Assigned - Amounts constrained for specific purposes that are internally imposed. In governmental funds other than
the General fund, assigned fund balance represents all remaining amounts that are not classified as nonspendable
and are neither restricted nor committed. In the General fund, assigned amounts represent intended uses established
by the Ice Arena Board itself or by an official to which the governing body delegates the authority. The Ice Arena
Board has adopted a fund balance policy which delegates the authority to assign amounts for specific purposes to the
Finance Director and/or Organization Administrator.
Unassigned - The residual classification for the General fund and also negative residual amounts in other funds.
The Organization considers restricted amounts to be spent first when both restricted and unrestricted fund balance is
available. Additionally, the Organization would first use committed, then assigned, and lastly unassigned amounts of
unrestricted fund balance when expenditures are made.
Net position
Net position represents the difference between assets and deferred outflows and liabilities and deferred inflows. Net
position is displayed in three components:
a. Net investment in capital assets - Consists of capital assets, net of accumulated depreciation reduced by any
outstanding debt attributable to acquire capital assets.
b. Restricted net position -Consists of net position restricted when there are limitations imposed on their use
through external restrictions imposed by creditors, grantors, laws or regulations of other governments.
c. Unrestricted net position - All other net positions that do not meet the definition of "restricted" or "net
investment in capital assets".
-31- STMA Arena Board Mtg 04/13/15 Page 35
ST. MICHAEL - ALBERTVILLE ICE ARENA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Comparative datafreclassifications
Comparative total data for the prior year has been presented only for the General Fund in order to provide an
understanding of the changes in financial position and operations of this fund. Also, certain amounts presented in the
prior year data have been reclassified in order to be consistent with the current year's presentation.
Note 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary information
An annual budget is adopted on a basis consistent with accounting principles generally accepted in the United States of
America for the General fund. All annual appropriations lapse at fiscal year-end. The Organization does not use
encumbrance accounting.
The Board adopts an annual budget for the Organization. During the budget year, supplemental appropriations and
deletions may be authorized by the Organization. The amounts shown in the financial statements as `Budget' represent
the original and final budgeted amounts. The Organization prepares its budget on a basis consistent with accounting
principles generally accepted in the United States of America. All budgeting appropriations lapse at year-end.
B. Excess of expenditures over appropriations
For the year ended December 31, 2014 expenditures exceed appropriations in the following functions of the General
fund as well as the fund as a whole:
Excess of
Expenditures
Over
Function Budget Actual Appropriations
Culture and recreation S 294,787 S 346,322 S 51,535
-32- STMA Arena Board Mtg 04/13/15 Page 36
ST. MICHAEL - ALBERTVILLE ICE ARENA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 3: DETAILED NOTES ON ALL FUNDS
A. Deposits and investments
Deposits
Custodial credit risk for deposits and investments is the risk that in the event of a bank failure, the Organization's
deposits and investments may not be returned or the Organization will not be able to recover collateral securities in the
possession of an outside party. In accordance with Minnesota statutes and as authorized by the Organization Council,
the Organization maintains deposits at those depository banks, all of which are members of the Federal Reserve System.
Minnesota statutes require that all Organization deposits be protected by insurance, surety bond or collateral. The
market value of collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds.
Authorized collateral in lieu of a corporate surety bond includes:
• United States government Treasury bills, Treasury notes, Treasury bonds;
• Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation
service available to the government entity;
• General obligation securities of any state or local government with taxing powers which is rated "A" or better
by a national bond rating service, or revenue obligation securities of any state or local government with taxing
powers which is rated "AA" or better by a national bond rating service;
• General obligation securities of a local government with taxing powers may be pledged as collateral against
funds deposited by that same local government entity;
• Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by
written evidence that the bank's public debt is rated "AA" or better by Moody's Investors Service, Inc., or
Standard & Poor's Corporation; and
• Time deposits that are fully insured by any federal agency.
Minnesota statutes require that all collateral shall be placed in safekeeping in a restricted account at a Federal Reserve
Bank, or in an account at a trust department of a commercial bank or other financial institution that is not owned or
controlled by the financial institution furnishing the collateral. The selection should be approved by the government
entity.
At December 312014, the Organization had $105,028 invested in an external investment pool maintained by the City of
Albertville. The Organization funds are pooled with the City of Albertville and invested in accordance with Minnesota
Statues which are the same for Minnesota Cities as for the Organization. Investment earnings (including interest and
market value changes) are allocated to the Organization each month based on the Organization's respective share of the
total investment portfolio held by the pool.
-33- STMA Arena Board Mtg 04/13/15 Page 37
ST. MICHAEL - ALBERTVILLE ICE ARENA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
B. Capital assets
Capital asset activity for the year ended December 31, 2014 was as follows:
Beginning Ending
Governmental activities
Capital assets not being depreciated
Land $ 102,000 $ - $ - $ 102,000
Capital assets being depreciated
Buildings
1,748,331
269,115
- 2,017,446
Improvements other than buildings
20,495
-
- 20,495
Machinery and equipment
195,377
-
- 195,377
Total capital assets
being depreciated
1,964,203
269,115
- 2,233,318
Less accumulated depreciation for
Buildings
(578,693)
(49,328)
- (628,021)
Improvements other than buildings
(4,566)
(551)
- (5,117)
Machinery and equipment
(176,452)
(1,535)
- (177,987)
Total accumulated
depreciation
(759,711)
(51,414)
- (811,125)
Total capital assets
being depreciated, net
1,204,492
217,701
- 1,422,193
Governmental activities
capital assets, net
$ 1,306,492
$ 217,701 $
- $ 1,524,193
Depreciation expense charged to the culture
and recreation function
was $51,414.
C. Due to/from other funds
The General fund loaned $4,784 to the Capital Improvement fund to
eliminate the deficit cash balance in the fund. No
interest is charged on the balance and the balance is expected to be
paid back within one year.
-34- STMA Arena Board Mtg 04/13/15 Page 38
ST. MICHAEL - ALBERTVILLE ICE ARENA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
D. Long-term liabilities
Changes in long-term liabilities
Long-term liability activity for the year ended December 31, 2014 was as follows:
Beginning
Balance Increases Decreases
Ending Due Within
Balance One Year
Governmental activities
Compensated
absences payable $ - $ 6,409 $ (2,985) $ 3,424 $ 2,568
In the event an employee of the Organization would retire or resign, in good standing, a portion of the governmental
compensated absences would mature. The portion applicable to that employee would be recorded as a liability and would
be liquidated through the General fund.
Note 4: OTHER INFORMATION
Risk management
The Organization is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and
omissions; injuries to employees; and natural disasters for which the Organization carries insurance. The Organization
obtains insurance through participation in the League of Minnesota Cities Insurance Trust (LMCIT), which is a risk sharing
pool with approximately 800 other governmental units. The Organization pays an annual premium to LMCIT for its workers
compensation and property and casualty insurance. The LMCIT is self-sustaining through member premiums and will
reinsure for claims above a prescribed dollar amount for each insurance event. Settled claims have not exceeded the
Organization's coverage in any of the past three fiscal years.
Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated.
Liabilities, if any, include an amount for claims that have been incurred but not reported (IBNRs). The Organization's
management is not aware of any incurred but not reported claims.
-35- STMA Arena Board Mtg 04/13/15 Page 39
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-36- STMA Arena Board Mtg 04/13/15 Page 40
OTHER REQUIRED REPORT
ST. MICHAEL - ALBERTVILLE ICE ARENA
ALBERTVILLE, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2014
-37- STMA Arena Board Mtg 04/13/15 Page 41
THIS PAGE IS LEFT BLANK
INTENTIONALLY
-38- STMA Arena Board Mtg 04/13/15 Page 42
Expert advice. When you need it.s'
REPORT ON LEGAL COMPLIANCE
INDEPENDENT AUDITOR'S REPORT
Chair and Members
of the Ice Arena Board
St. Michael — Albertville Ice Arena
Albertville, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of
America, the financial statements of the governmental activities and each major fund of the
St. Michael — Albertville Ice Arena, Albertville, Minnesota as of and for the year ended December 31,
2014, and the related Notes to the Financial Statements, and have issued our report thereon dated
April 7, 2015.
The Minnesota Legal Compliance Audit Guide for Political Subdivisions, promulgated by the State
Auditor pursuant to Minnesota Statutes § 6.65, contains six categories of compliance to be tested:
contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and
disbursements and miscellaneous provisions. Our audit considered all of the listed categories, except
that we did not test for compliance with the provisions for public indebtedness because the Organization
has no indebtedness.
In connection with our audit, nothing came to our attention that caused us to believe that the
Organization failed to comply with the provisions of the Minnesota Legal Compliance Audit Guide for
Political Subdivisions. However, our audit was not directed primarily toward obtaining knowledge of
such noncompliance. Accordingly, had we performed additional procedures, other matters may have
come to our attention regarding the Organization's noncompliance with the above referenced provisions.
This report is intended solely for the information and use of those charged with governance,
management of the Organization and the State Auditor and is not intended to be and should not be used
by anyone other than these specified parties.
KERN, DEWENTER, VIERE, LTD.
Minneapolis, Minnesota
April 7, 2015
-39- STMA Arena Board Mtg 04/13/15 Page 43
ST. NHCHAEL — ALBERTVILLE ICE ARENA
COMMUNICATIONS LETTER
Year Ended December 31, 2014
STMA Arena Board Mtg 04/13/15 Page 44
ST. MICHAEL - ALBERTVILLE ICE ARENA
TABLE OF CONTENTS
REPORT ON MATTERS IDENTIFIED AS A RESULT OF
THE AUDIT OF THE FINANCIAL STATEMENTS............................................................... 1
MATERIALWEAKNESS.............................................................................................................. 2
REQUIRED COMMUNICATION................................................................................................ 3
STMA Arena Board Mtg 04/13/15 Page 45
YDV
Expert advice. When you need it.5'
REPORT ON MATTERS IDENTIFIED AS A RESULT OF
THE AUDIT OF THE FINANCIAL STATEMENTS
Chair and Members of the Ice Arena Board and Management
St. Michael — Albertville Ice Arena
Albertville, Minnesota
In planning and performing our audit of the financial statements of St. Michael — Albertville Ice Arena,
Albertville, Minnesota as of and for the year ended December 31, 2014, in accordance with auditing
standards generally accepted in the United States of America, we considered the Organization's internal
control over financial reporting (internal control) as a basis for designing our auditing procedures that
are appropriate in the circumstances for the purpose of expressing our opinion on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the Organization's
internal control. Accordingly, we do not express an opinion on the effectiveness of the Organization's
internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph
and was not designed to identify all deficiencies in internal control that might be material weaknesses or
significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that
were not identified.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies in internal control, such that there is a reasonable possibility that a material
misstatement of the Organization's financial statements will not be prevented, or detected and corrected
on a timely basis. The material weakness identified is stated within this letter.
A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness, yet important enough to merit attention by those charged with
governance.
This communication is intended solely for the information and use of management, Board Members,
others within the Organization and state oversight agencies and is not intended to be and should not be
used by anyone other than these specified parties.
KERN, DEWENTER, VIERE, LTD.
Minneapolis, Minnesota
April 7, 2015
STMA Arena Board Mtg 04/13/15 Page 46
ST. MICHAEL — ALBERTVILLE ICE ARENA
MATERIAL WEAKNESS
December 31, 2014
LACK OF SEGREGATION OF ACCOUNTING DUTIES
The Organization has a lack of segregation of accounting duties due to a limited number of office
employees. In order to have appropriate segregation of duties, the performance of the following duties
would need to be completed by a different employee: initiation and authorization of transactions,
recording and processing of transactions, reconciliation and reporting of transactions and financial
information and custody of assets. The lack of adequate segregation of accounting duties could
adversely affect the Organization's ability to initiate, record, process and report financial data consistent
with the assertions of the management in the financial statements.
Management and the Ice Arena Board are aware of this condition and have taken certain steps to
compensate for the lack of segregation but due to the number of staff needed to properly segregate all of
the accounting duties, the costs of obtaining desirable segregation of accounting duties can often exceed
benefits which could be derived. However, management and the Ice Arena Board must remain aware of
this situation and should continually monitor the accounting system, including changes that occur.
Organization's Response:
Arena and City staff are aware of the lack of segregation, which is due to limited staff dedicated to the
STMA Arena, especially in concessions, and continues to look for opportunities to provide additional
segregation in a cost effective manner.
2
STMA Arena Board Mtg 04/13/15 Page 47
ST. NHCHAEL — ALBERTVILLE ICE ARENA
REQUIRED COMMUNICATION
December 31, 2014
We have audited the financial statements of the St. Michael — Albertville Ice Arena, Albertville,
Minnesota for the year ended December 31, 2014, and have issued our report thereon dated April 7,
2015. Professional standards require that we provide you with the following information related to our
audit.
OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN
THE UNITED STATES OF AMERICA
As stated in our engagement letter, our responsibility, as described by professional standards, is to
express an opinion about whether the financial statements prepared by management with your oversight
are fairly presented, in all material respects, in conformity with accounting principles generally accepted
in the United States of America. Our audit of the financial statements does not relieve you or
management of your responsibilities.
PLANNED SCOPE AND TIMING OF THE AUDIT
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements; therefore, our audit involved judgment about the number of transactions to be
examined and the areas to be tested.
Our audit included obtaining an understanding of the Organization and its environment, including
internal control, sufficient to assess the risks of material misstatement of the financial statements and to
design the nature, timing and extent of further audit procedures. Material misstatements may result from
(1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets or (4) violations of laws or
governmental regulations that are attributable to the Organization or to acts by management or
employees acting on behalf of the Organization.
QUALITATIVE ASPECTS OF ACCOUNTING PRACTICES
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the Organization are described in Note 1 to the financial statements. No
new accounting policies were adopted and the application of existing policies was not changed during
the year ended December 31, 2014. We noted no transactions entered into by the Organization during
the year for which there is a lack of authoritative guidance or consensus. All significant transactions
have been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's knowledge and experience about past and current events and assumptions about
future events. Certain accounting estimates are particularly sensitive because of their significance to the
financial statements and because of the possibility that future events affecting them may differ
significantly from those expected. The most sensitive estimate affecting the financial statements was:
Depreciation — The Organization is currently depreciating its capital assets over their estimated
useful lives, as determined by management, using the straight-line method.
The financial statement disclosures are neutral, consistent and clear.
3
STMA Arena Board Mtg 04/13/15 Page 48
ST. MICHAEL — ALBERTVILLE ICE ARENA
REQUIRED COMMUNICATION
December 31, 2014
DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT
We encountered no significant difficulties in dealing with management in performing and completing
our audit.
CORRECTED AND UNCORRECTED MISSTATEMENTS
Professional standards require us to accumulate all misstatements identified during the audit, other than
those that are clearly trivial, and communicate them to the appropriate level of management.
Management did not identify and we did not notify them of any uncorrected financial statement
misstatements.
In addition, none of the misstatements detected as a result of audit procedures and corrected by
management were material, either individually or in the aggregate, to the financial statements taken as a
whole.
DISAGREEMENTS WITH MANAGEMENT
For purposes of this letter, a disagreement with management is a financial accounting, reporting or
auditing matter, whether or not resolved to our satisfaction that could be significant to the financial
statements or the auditor's report. We are pleased to report that no such disagreements arose during
the course of our audit.
MANAGEMENT REPRESENTATIONS
We requested certain representations from management which were included in the management
representation letter.
MANAGEMENT CONSULTATIONS WITH OTHER INDEPENDENT ACCOUNTANTS
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation
involves application of an accounting principle to the Organization's financial statements or a
determination of the type of auditor's opinion that may be expressed on those statements, our
professional standards require the consulting accountant to check with us to determine that the
consultant has all the relevant facts. To our knowledge, there were no such consultations with other
accountants.
OTHER AUDIT FINDINGS OR ISSUES
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as the Organization's auditors. However, these
discussions occurred in the normal course of our professional relationship and our responses were not a
condition to our retention.
4
STMA Arena Board Mtg 04/13/15 Page 49
ST. MICHAEL-ALBERTVILLE ICE ARENA BOARD MINUTES
March 9, 2015
6:00 p.m.
Present: Chairman Chris Schumm, Members Gayle Weber, John Vetsch, Cody Gulick, and Walter
Hudson (6:13) were present. Member Jeff Lindquist was absent. Also present: STMA Ice Arena
Manager Grant Fitch, City Administrator Adam Nafstad, Youth Hockey Association President Josh
Opiola, Roger Lucy, and Chris Hanson. The meeting was called to order at 6:03 p.m. by Chairman
Schumm.
Set Agenda
Members Weber\Gulick moved to set the agenda as presented. All voted aye.
Approval of Minutes
Members Weber\Gulick moved to approve the minutes of the February 9, 2015 Board Meeting as
presented. All voted aye. Member Vetsch abstained.
Finance Reports
Lannes noted that the reports reflect the proposed budget, the receivables do not include February Ice
time which will be invoiced this week and the Capital Improvement Fund reimbursement from the
three entities will be verified and billed in March.
Members Weber\Gulick moved to approve the February list of claims totaling $15,439.27 and the
February Financial Report as presented. All voted aye.
Arena Manager's Report
Fitch reported on the PWB Regional Tournament hosted by Youth Hockey. Opiola received a number
of good comments and feedback from attendees, spectators, and Minnesota Hockey.
Fitch updated the Board on the flat roof issues that are part of the locker room addition. It has a rubber
membrane that has pulled away from the perimeter and some moisture has gotten behind it on the
southeast corner. Staff will continue to look into the issue.
Chairman Schumm mentioned that Terry from ISD 885 thought we should look into dog houses
around a few stacks on the roof and needed some ice cleats repaired.
Old Business — 2015 Preliminary Budget Discussion
Lannes provided the second preliminary 2015 budget showing a $6,000 deficit without a rate increase.
The budget includes an estimated $24,000 for gas, which staff noted as strictly an estimate since we
only have 2-3 months of gas bills with the new system. The actual amount could be more if the system
consumes more than predicted, if temperatures demand more use, or if there is a rate increase from
CenterPoint Energy.
Staff provided that one option to manage the deficit would be a $5.00 per hour rate increase which
would bring the budget to almost breakeven. This would be at $190 to $195 as prime rate effective
September 1 st.
STMA Arena Board Mtg 04/13/15 Page 50
STMA Ice Arena
March 9, 2015 Minutes
Page 2
The other options staff provided were to have the three entities contribute a small amount to
operations, require prepaid contracts for outsiders and a cancelation policy with a monetary fee if the
ice cancelled is not resold due to timing of the cancelation. Nafstad reminded the Board that our repeat
users are very good, so having a prepaid policy or cancelation policy for major users would not solve
our deficit.
Staff will put together a prepaid policy or practice to the Board in the future.
Lannes reminded the Board that the budget and rates need to be adopted at the April meeting in order
for Youth Hockey Association to have enough time to prepare the information for their spring sign up.
Chairman Schumm would like to hear input on the budget and rates from Youth Hockey and member
Jeff Lindquist. Opiola told the Board that Youth Hockey understands the possibility for a $5.00 per
hour increase and they would be okay with that. Vetsch asked Chairman Schumm whether or not, over
time, if costs to run the new system would decrease or increase. Chairman Schumm explained it
depends on the outdoor temperature and the fluctuations, so the cost would not likely decrease.
Member Weber asked if there was any type of a program, possibly with CenterPoint, related to
managing costs. Staff has a call into CenterPoint and will report back to the Board.
Member Weber asked about sales tax and if we pay sales tax to the state. Lannes explained that we
purchase our concessions tax exempt and pay sales tax monthly on the sales to the state. If we
purchased the items and paid tax the STMA Ice Arena would still need to pay sales tax on the
difference between the purchase price and the sale price.
Youth Hockey Association
Opiola updated the Board that Youth Hockey has drafted an article of commitment in writing and was
passed by the STMA Youth Hockey Executive Board and will be going to the membership on March
9, 2015. They want to grow the membership and to love the game. They wanted to show the
commitment and the objective to work together with the STMA Ice Arena Board. Hanson mentioned
that they appreciate the efforts of the Youth Hockey Association and the STMA Ice Arena Board.
Member Hudson asked Opiola to address the nature of the commitment in relation to how the board
members of Youth Hockey Association changes in the future. Opiola replied that the intent is to have
the resolution included in their (YHA) meeting minutes and to serve as a statement that they are
committed to a second sheet solution.
There was discussion on past year's communication, understanding and transparency between the
Youth Hockey Association and the STMA Ice Arena Board. In addition, there was a discussion
regarding how to educate the community on a working plan for a successful second sheet, operations
of the Arena and gain support. Youth Hockey plans on hiring an operations director who would be
appointed and report directly to the YHA Executive Board. There was also discussion related to
educating the public and YHA membership as to operations of the Arena, its financial transparency,
and that the arena cannot finance capital on its own.
Adiourn
Members Vetch\Gulick moved to adjourn at approximately 6:44 p.m. All voted aye.
Attest:
STMA Arena Board Mtg 04/13/15 Page 51
STMA Ice Arena
March 9, 2015 Minutes
Page 3
Tina Lannes, City Finance Director
STMA Arena Board Mtg 04/13/15 Page 52
A
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STMA Ice Arena Preliminary Budget to Actual March 2015 (Cash Basis)
Income
Ice Rental (currently includes Dec Acct.
Rec.Collected
Concessions
Other Revenues (Advertising/LMC/ins claims)
Vending
Open Skate/Hockey, etc
Interest
Misc Revenue
Total Income
Expenses
Salaries, wages, taxes & Benefits
Supplies (Office, misc)
Supplies (Concession)
Fuel, Misc
Professional Services
Sales Tax
Telephone
Electric
Gas
Water
Refuse
Insurance
Administration
Misc.
Repair Maintenance — Machinery
Repair Maintenance — Building
Total Operating Expenses
Net Income/Loss
2015
2015
Proposed
March 2015
Actual YTD
%
Budget (draft)
Actual
3/31/15
Annual
$265,500.00
$0.00
$89,811.00
33.83%
$32,000.00
$2,629.25
$18,971.62
59.29%
$14,500.00
$0.00
$0.00
0.00%
$1,000.00
$0.00
$50.00
5.00%
$6,500.00
$230.00
$1,046.00
16.09%
$1,000.00
$0.00
$0.00
0.00%
$2,000.00
$166.00
$1,248.00
$322,500.00
$3,025.25
$111,126.62
34.46%
$115,713.00
$8,545.86
$32,887.27
28.42%
$1,500.00
$933.72
$1,163.47
77.56%
$13,250.00
$941.87
$5,201.83
39.26%
$1,800.00
$0.00
$252.98
14.05%
$15,000.00
$5,669.63
$5,875.28
39.17%
$2,700.00
$1,309.21
$1,309.21
48.49%
$900.00
$71.40
$214.20
23.80%
$70,000.00
$4,855.85
$10,301.42
14.72%
$29,500.00
$3,339.49
$7,041.04
23.87%
$17,800.00
$5,934.87
$9,804.93
55.08%
$1,400.00
$298.48
$876.96
62.64%
$9,000.00
$6,637.00
$8,791.00
97.68%
$11,920.61
$993.38
$2,980.14
25.00%
$725.00
$0.00
$284.98
39.31 %
$10,000.00
$368.22
$402.17
4.02%
$27,500.00
$695.50
$2,154.11
7.83%
$328,708.61
$40,594.48
$89,540.99
27.24%
($6,208.61) ($37,569.23) $21,585.63
STMA Arena Board Mtg 04/13/15 Page 53
STMA ICE ARENA CASH BALANCES AND RECEIVABLES
March 31, 2015
L,asn 6aiance vperauori5
Cash Balance 1/1/15 $108,337
Add Revenues (collected in 2015) $111,127
Less Expenses $ 89,541
Cash Balance 3/31/15 $129,922
Cash for operations
Total Cash Balance 3/31/15
$129,922
$129,922
Accounts Receivable (invoiced)
Operations March 31, 2015 - $ 41,280
Cash Balance Dedicated Capital Improvement Fund
Arena Owner Dedicated Cap. Imp. Fund
Beginning Balance 1/1/15-$4,784
Dehumid 2nd pmt Albert ($18,241.91 billed 4/8) $0
Dehumid 2nd pmt St. Mich ($18,241.91 billed 4/8) $0
Dehumid 2nd pmt ISD 885 ($18,241.91 billed 4/8) $0
2015 contribution rec. by St. Michael $0
2015 contribution rec. by Albertville $0
2015 contribution rec. by STMA Schools $0
Balance 3/31/15 ($4,784)
STMA Arena Board Mtg 04/13/15 Page 54
STMA Ice Arena Vendor Check Detail Register
CITY OF ALBERTVILLE
March 2015
Check Amt Invoice Comment
10100 Premier Bank
Paid Chk# 003487E 3/2/2015 RANDYS ENVIRONMENTAL SERVICES
E 810-00000-384 Refuse/Garbage Disposal $298.48 ARENA MAR15 STMAArena Garbage Mar2015
Paid Chk# 003490E 3/2/2015 WATSON COMPANY
E 810-00000-252 Food/Consessions For Resale $384.66 848566 STMA Arena Concessions
Paid Chk# 003504E 3/16/2015 ABDO, EICK & MEYERS LLP
E 810-00000-301
Auditing and Acct g Services
$234.32
340664
Prof Audit/Acctg Srvcs
Paid Chk# 003509E
3/16/2015 FERRELLGAS
E 810-00000-212
Motor Fuels
$135.49
1086048802
STMAArena Propane
E 810-00000-212
Motor Fuels
$117.49
1086273821
STMAArena Propane
E 810-00000-212
Motor Fuels
$99.49
1086526023
STMA Arena Propane
Paid Chk# 003517E 3/16/2015 WATSON COMPANY
E 810-00000-252 Food/Consessions For Resale $159.86 848972 STMAArena Concessions
Paid Chk# 003520E 3/16/2015 WRIGHT-HENNEPIN COOP ELECTRIC
E 810-00000-381 Electric Utilities $27.95 STMA STMAArena Fire Panel Monitor April 2015
Paid Chk# 034097 3/2/2015 ARAMARK UNIFORM SERVICES
E 810-00000-405 Repair/Maint - Buildings $14.25 629-8170103 STMAArena Mats, Mops
Paid Chk# 034106 3/2/2015 LEAGUE OF MN CITIES INS TRUST
E 810-00000-361 General Liability Ins $6,618.00 48908 STMAArena Prop, Liab, Auto, Equip Ins
Paid Chk# 034121 3/2/2015 ZEP SALES & SERVICE
E 810-00000-200 Office Supplies (GENERAL) $607.82 9001458805 STMAArena Cleaning & Facility Supplies
Paid Chk# 034124 3/10/2015 CARD SERVICES(ARENA)
E 810-00000-252 Food/Consessions For Resale $8.58 20708 STMA Arena Concessions
E 810-00000-252 Food/Consessions For Resale $21.18 21316 STMA Arena Concessions
E 810-00000-252 Food/Consessions For Resale $12.87 22808 STMAArena Concessions
Paid Chk# 034127 3/10/2015 CHARTER COMMUNICATIONS
E 810-00000-321 Telephone $71.40 STMA MAR15 STMA Arena Telephone
Paid Chk# 034135 3/16/2015 ARAMARK UNIFORM SERVICES
E 810-00000-405 Repair/Maint - Buildings $14.26 629-8179491 STMAArena Mats, Mop
Paid Chk# 034136 3/16/2015 BANYON DATA SYSTEMS
E 810-00000-300 Professional Srvs (GENERAL) $97.14 152521 POS Addt'I Entity & Inv Support
Paid Chk# 034137 3/16/2015 BCBS OF MINNESOTA
E 810-00000-130 Employer Paid Ins (GENERAL) $752.75 C1261100APR1 Emp Health Ins
Paid Chk# 034144 3/16/2015 COCA COLA ENTERPRISES BOTTLING
E 810-00000-254 Soft Drinks/Mix For Resale $354.72 168197209 STMAArena Concessions
STMA Arena Board Mtg 04/13/15 Page 55
March 2015
Check Amt Invoice Comment
Paid Chk# 034146 3/16/2015 DAN DEHMER LANDSCAPING INC
E 810-00000-300 Professional Srvs (GENERAL) $300.00 5341 STMA Arena Snow Removal Feb 2015
Paid Chk# 034151 3/16/2015 DJS TOTAL HOME CARE CTR-ARENA
E 810-00000-405 Repair/Maint - Buildings $6.99 81617
E 810-00000-404 Repair/Maint - Machinery/Equip $15.99 81707
Paid Chk# 034159 3/16/2015 KDV
E 810-00000-301 Auditing and Acct g Services $5,000.00 217616
Paid Chk# 034165 3/16/2015 LEAGUE OF MN CITIES INS TRUST
E 810-00000-150 Worker s Comp (GENERAL) $19.00 29287
Paid Chk# 034166 3/16/2015 MAXIMUM SOLUTIONS, INC
E 810-00000-200 Office Supplies (GENERAL) $300.00 16804
STMA Arena Cable Ties
STMA Arena Antifreeze
STMA Arena Audit Financial
STMA Arena WC Final Audit
STMA Arena MaxEnterprise Software Annual Agrmt
Paid Chk# 034169 3/16/2015 NEWMAN TRAFFIC SIGNS
E 810-00000-300 Professional Srvs (GENERAL) $38.17 TI-0283364 STMA Arena No Parking Fire Lane Sign
Paid Chk# 034174 3/16/2015 SCR, INC - ST. CLOUD
E 810-00000-405 Repair/Maint -Buildings $660.00 295221 STMAArena Refrig Equip Maint
Paid Chk# 034175 3/16/2015 STRATEGIC EQUIPMENT & SUPPLY
E 810-00000-580 Capital - Other Equipment $352.23 2324694 STMA Arena Microwave for Concesstions
Paid Chk# 034183 3/16/2015 ZEP SALES & SERVICE
E 810-00000-200 Office Supplies (GENERAL) $25.90 9001463750 STMA Cleaning Supplies
Paid Chk# 034187 3/25/2015 CENTERPOINT ENERGY
E 810-00000-383 Gas Utilities $3,339.49 STMA FEB2015 STMA Arena 5898 Lachman Ave
Paid Chk# 034192 3/25/2015 XCEL ENERGY
E 810-00000-381 Electric Utilities
$4,827.90 STMA449170560
810 STMA ARENA $24,916.38
STMA Arena 5898 Lachman
STMA Arena Board Mtg 04/13/15 Page 56
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A,lbertvillf.
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MANAGER' GENERAL UPDATE
Date: April 131 , 2015
To: STMA Arena Board
From: Grant Fitch, STMA Arena Manager
ARENA RENTAL HOURS — APRIL
Name
Prime -time
Youth Hockey
0 hours
Adult Hockey
0 hours
High School Boys/Girls
0 hours
Public Skating/OH
0 hours
Private rentals
0 hours
Lacrosse (local teams)
25 hours
Total hours
25 hours
city of
. Ilic el
Off-peak
General Operations: The ice was removed on March 10, 2015 in preparation for the Youth
Hockey Event.
Knights to Remember Event: The event went well. Staff time required for the event was
approximately 22 hours.
BMI Music license: Currently the Arena is not licenses to play any music other than music
played by local radio stations. If the music is to be played from a CD, ipod, mp3, or other such
device, licensure is required. The Arena will need to decide if it desires to enter into a licensure
agreement.
Payment Options: Currently the Arena accepts credit cards and checks to pay for concessions,
open skate and open hockey. Starting September 1 we are planning on no longer accepting
checks, as we have an ATM in the lobby. The reason for the change is due to too many out of
town returned checks.
MN Swarm Youth Lacrosse: Canceled the 80 hours rental they had previously booked.
Spring Maintenance projects
• Building Clean up: Rink floor and bleachers, etc.
• Touch up Painting: Locker rooms, players boxes, lobby, corridor and bathrooms
• Scheduling 2015/16 Ice Time
• Rink Board cleaning: puck marks on boards and Ad panels
• Rink Glass Cleaning: Interior and exterior
• Machine maintenance and repair
• Snow pit clean and repair
STMA Arena Board Mtg 04/13/15 Page 57
Paint / repair: 2 sets of hockey nets
Change out rink bulbs
Various safety related repairs
Maintenance Contract: May 1, 2015 is the anniversary date of the maintenance agreement with
SCR. Staff is in the process of renewing the annual agreement for coverage to continue through
April of 2016. The blanket coverage program establishes a predetermined price for maintenance
service of the arenas existing refrigeration and dehumidification systems. Should the actual cost
of maintenance fall short of the agreement price, the arena receives 50% of the balance back.
When costs exceed the agreement price, the vendor (SCR) covers all overages. The arena has
been using this program for 4 years and believes it has worked very well. The proposed
agreement price for 2015-2016 is $7,920 ($660 per month). Below is a summary of the blanket
program for the last four years:
Agreement
Year
Price
2011-2012
$7,000.00
2012-2013
$7,000.00
2013-2014
$7,000.00
2014-2015
$7,920.00
Time and Material Cost
$4,596.00
$7,137.98
$10, 301.95
$11,312.00
Balance
$1202.00 (Divided 50/50)
$137.98 (Excess Covered by Contract)
$3,301.95 (Excess Covered by Contract)
$3392.00 (Excess Covered by Contract)
2015-2016 Contract Price $7,920.00, Monthly payment $660.00 (No change from last year)
STMA Arena Board Mtg 04/13/15 Page 58
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