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2011-04-25 CC Minutes Special JointSt. Michael City Council Minutes Special Joint City Council Meeting with Albertville April 25, 2011 CALL TO ORDER ROLL CALL 6:30 P.M. Pursuant to due call and notice a special joint meeting of the St. Michael and Albertville City Councils was held on Monday, April 25, 2011, in the Council Chambers of St. Michael City Hall, at 11800 Town Center Drive at 6:30 p.m. Present: Albertville Mayor Mark Meehan (in at 6:40); Council Members Jillian Schommer, Larry Sorensen, Dan Wagner, and John Vetsch; Albertville City Administrator Larry Kruse; St. Michael Mayor Jerry Zachman; Council Members Kevin Kasel, Joe Marx, and Nadine Schoen; St. Michael City Administrator Robert Derus, and City Clerk Diana Berning. Call to Order St. Michael Mayor Jerry Zachman called the meeting to order at 6:35 p.m., declaring a quorum present. Set Agenda The agenda was set with the STMA Ice Arena as the only item of discussion. STMA Ice Arena Albertville Administrator Kruse explained the STMA Arena Board has been considering an expansion to the ice arena for several years. It has been determined there is a definite need for a second sheet of ice; however, the entities involved have struggled with how to finance an expansion project. He noted that after reviewing other communities' arenas and meeting with the architect it has been estimated the first phase for a second sheet of ice would cost approximately $3.3 million, which would include soil corrections and repairing the leaking roof on the current arena. The second phase could be completed in later years and would include additional seating and a lobby area. Kruse provided the members with a proposed financing plan that has all four entities (Albertville, St. Michael, STMA school district, and youth hockey) contributing toward the project. The plan also requires youth hockey to contribute $500,000 prior to construction, which would be used for bond payments in the first five years to allow both cities involved to ease into the financing. It was also stated the STMA school district has already contributed about $500,000 by purchasing the land a few years ago. The goal of the joint meeting was to determine whether both cities would be willing to move forward with the project if the youth hockey association was able to come up with a certain dollar amount up front. There were a few dozen hockey parents in attendance. St. Michael Mayor Zachman thanked them for coming and said the meeting would not be open for public comment, but that they were welcome to stay and listen to the discussion. Albertville Mayor Meehan said the Albertville council has discussed the arena expansion at several council meetings and several councilors have expressed concern over how to pay for the project with all the other projects going on in Albertville. It would be helpful if youth hockey came up with $500,000 to start with, since it would give the cities a few years to ease into the payments. St. Michael Councilor Kasel said the biggest challenge is how to fit this into the budget; not only for the capital costs, but also the operating costs since it is already planned that the second sheet Joint Council Meeting Cities of Albertville and St. Michael — April 25, 2011 — Page 2 of ice would have an annual operating deficit. The deficit is less if depreciation is not included, but there is still a deficit. He also said if state aid to counties is cut from the state budget, the cities may have to pay more for police protection and other county services, which would further impact the budgets. The current sheet of ice will also probably require additional maintenance and repairs in the near future. Albertville Councilor Wagner said hockey will eventually be a budget line -item for both cities. Hockey is important to the community and if the program is successful it will bring in more residents. The tough part is determining how much money to put towards the program. There was discussion on the levy impact for both cities if the project does move forward. Both St. Michael and Albertville are already estimating a 5% levy increase next year to cover bond payments and upcoming street improvement projects. An extra 2% increase for hockey will be challenging. The school district is also stretched for money and may need to come up with more if the state continues to decrease its funding for schools. This is a tough economy right now. There is not unnecessary spending going on in either city or the school district. To put money towards the ice arena would require either additional tax money or cutting other city services. Fuel prices will also continue to rise which adds to the expenses. The youth hockey leadership has indicated they are not willing to contribute an additional $40,000 each year towards the cost of the bonds; however, Kruse noted families are spending several hundred dollars each year in traveling costs to bring their kids to practice in surrounding communities and many have indicated they would be willing to pay an extra $100 to be able to have their kids practice in Albertville. Albertville Councilor Schommer asked if there was a timeline for when the project would be started or when the money would be needed by. She also suggested that the fundraising effort be expanded to include the entire community, not just youth hockey. At this time, the project is not anticipated to begin until the money is raised. It was determined an amount needs to be decided on soon, so fundraising can be done throughout the summer months. There was concern that the current councils cannot make decisions for future councils. It may take three years to raise the money needed and by that time other councilors could be in office and decide not to build the expansion. The economy could also change between now and when the money is raised which could affect the decision to move forward. If interest and constructions costs dramatically increase, it will require additional money for the project. A question was asked if the arena could be turned over to youth hockey. It would be difficult for youth hockey to be able to secure financing for the building and then the facility would be taxable. Youth hockey leadership also changes and future leaders may not be able to make it keep going. It is unlikely any organization would be able to run it more efficiently than the cities. Meehan said he feels bad for the situation. He knows the need is there for a second sheet of ice, but right now is a tough time. The councils need to decide on the priorities for each city and the best way to spend taxpayer's dollars. The benefits of this economy are that bond interest is relatively low and construction costs are low, but there is no money to even start moving forward with. The decision could be brought to a referendum and the residents could vote on it, although that would likely end in the project not happening. It was also acknowledged that residents will already see levy increases from the cities and school district. How much more can we ask our residents to pay? Marx also commented that it will affect businesses more than residents, and Joint Council Meeting Cities of Albertville and St. Michael — April 25, 2011 — Page 3 right now is a tough time for everyone. Should the city raise taxes for something that will not be supported by 80-90% of the population? Youth hockey indicated that $500,000 seemed like a reasonable starting amount for them to raise before the project could move forward. Several of the parents present also seemed to be okay with an extra $100 surcharge each year to put toward the debt payment for the second sheet of ice, since it will cut down on costs for traveling to other arenas. Zachman asked if staff would be able to put together additional amortization schedules based on different variables — such as a 20 year bond or a 25 year bond; how financing would look with $500,000, $750,000, and $1 million up front; what the cities' payments would be if the school district and youth hockey did not contribute annual amounts vs. what they would be if all four entities were contributing. Several councilors indicated they would prefer to keep the school district contributing annually to the project. There are two high school teams that use the arena as well, and they should be able to pay for some of the costs. There are also a lot of variables with the project itself — whether construction bids come in favorable and if interest rates stay low. Both councils agreed a starting number needs to be decided soon, so youth hockey can begin fundraising for the project. It would be best if a decision could be made at the May 91h Arena Board meeting. Staff will put together a number of schedules for each of the councils to consider at their upcoming council meetings, with the intent that the representatives to the Arena Board will be able to report the decisions at the May 9t' meeting. Adjourn Motion by Marx, seconded by Meehan to adjourn the meeting at 7:54 p.m. All voted aye. Attest: City Clerk Mayor