6.5. SR 12-15-1997.ty of
Item #6.5.
iver
MEMORANDUM
TO:
Mayor & City Council
FROM: Pat Klaers, City Administrator
DATE:
December 15, 1997
SUBJECT: Minnesota Sports Federation (MSF)
Update on State Grant Proposal
At the October 27, 1997, City Council meeting a motion was approved by the
Council which supported the MSF request for state financial assistance for
their construction project. Attached for your review is some of the most
recent correspondence between MSF and the state on its request for financial
assistance. The city is technically the applicant for this proposal, but MSF,
and more specifically its consultant, Pat Pelstring from Public Resource
Group, Inc., has been doing all of the paper work for this application.
· The material from the state dated 11/21/97 is in response to the
initial application from MSF.
· The 11/26/97 material from the state clarifies the city responsibility
in state financed projects.
· The 12/3/97 memo from Pat Pelstring provides an overview of some
conversations that he has had with the state regarding the state's
desire for additional information.
· The 12/5/97 material from Pat Pelstring is the formal response to
the state's request for additional information.
Representative Anderson and Senator Ourada have been kept abreast of the
application process and MSF information. It is virtually a guarantee that
this request will not be included within the Governor's bonding bill.
However, many of the projects that get funded at the end of the legislative
session are not part of the Governor's bonding bill. This MSF proposal will
be evaluated along with other local/regional requests during legislative
committee meetings. Full support of this proposal from our Representative
and Senator is necessary in order for them to "fight the good fight" in support
of this request. It is very difficult to even estimate our chances of success at
this time.
\\elkriver \sys\shr doc\couneil\msfpr op .doc
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · TDD & Phone: (612) 441-7420 · Fax: (612) 441-7425
State of Minnesota
Department of Finance
November 21, 1997
400 Centennial Building
658 Cedar Street
St. Paul, Minnesota 55155
Voice: (612) 296-5900
};ax: (612) 296-8685
TTY: 1-800-627-3529
Dear Local Government Official or Project Spokesperson:
Your community has submitted a capital request to the Department of Finance for consideration for
inclusion in the Governor's proposed capital budget to the 1998 Minnesota Legislature. The
Department of Finance, in cooperation with the Department of Administration, has been receiving
and reviewing capital requests from political subdivisions since May of this year.
The purpose of this letter is to communicate the results of our review, offer suggestions for changes
to your request, provide a preliminary project score for each project, and notify you of emerging
policy recommendations regarding funding for local projects.
The increasing number of capital requests from local jurisdictions have prompted concerns from
Governor Carlson regarding the limited availability of state assistance and increasingly high
expectations that are being created. In order to better manage our finite state bonding resources, the
Department of Finance recommends the following guidelines to the Governor and Legislature:
political subdivisions should fund local projects to the fullest extent possible before requesting
state assistance for capital costs;
2. local governments should provide, at minimum, 50% local match funding for capital costs;
a predesign study should be completed for each project prior to consideration of the request
in the 1998 legislative session; and
4. all on-going operating costs of the project should be financed locally, without state assistance.
It is my expectation that the Governor will be unlikely to recommend funding for local requests unless
these major recommendations are satisfied by project sponsors. Please consider these and other
recommendations, as enclosed, as you finalize your capital requests and decide whether you wish to
continue to make application for bonding funds. Final requests and application forms should be
resubmitted to the Department of Finance by December 5, 1997. If you have any questions, please
contact Mr. Lee Mehrkens of my staff at (612) 296-1700.
Warmest regards,
Wayne Simoneau
Commissioner
AN EQUALOPPORTUNITYEMPLOYER
Grants to, ..~itical Subdivisions Strategic Planning =ummary
AGENCY CAPITA,_ 6UDGET REQUEST
Fiscal Years 1998-2003
Dollars in Thousands ($137,500 = $138 thousand)
AGENCY MISSION STATEMENT:
The Department of Finance has received local project requests from a variety of
political subdivisions and associated local organizations throughout the state, as
provided in the following pages. These requests have been collectively grouped into
this section of the capital budget, "Grants to Political Subdivisions." These are local
requests which cannot be processed through existing state wide grant programs as
currently offered or proposed by state agencies.
DEPARTMENT OF FINANCE ANALYSIS:
In the following request forms, Depadment of Finance comments are provided for a
number of local projects that address the issue of local match funding. Recognizing
the interest of state decision-makers to occasionally form funding partnerships and
provide state financing for various local projects, many of which involve significant
state funding, the department wishes to outline a series of recommendations
regarding state funding for these local projects.
Recognizing that local project requests are quickly becoming more prevalent in the
state capital budget process, a number of public policy issues arise. First, the
department is concerned that state funding for local projects has the effect of
displacing resources otherwise intended for state agencies. Second, the department
is concerned that state funding for local projects has produced a situation in which
local governments now have a strong incentive to avoid prioritizing and financing
requests at the local level and avoid reordering local budgets accordingly. Third, the
process of providing state funds to local governments for predesign activities which
in turn produce additional requests for state construction funds seems to be a
curious incentive for the state to offer, given that requests typically outpace funding
capacity by as much as a three-to-one ratio.
In recent bonding bills, many local projects have received state funding based on
various non-state matching requirements. These ratios have been inconsistent.
Other projects have received appropriations with no local matching requirements at
all. While the application of match requirements has been uneven, the rationale is
clear -- match requirements recognize the local benefit of such projects, allow limited
state funds to extend further to the extent supplemented by local funds, require local
governments to have a greater stake in the success of the project, and enable local
projects to be funded at a higher level due to infusion of state resources.
Building on these concepts, the Department of Finance offers the following
recommendations for state funding of local capital projects:
· Political subdivisions should fund local projects to the fullest extent possible before
requesting state assistance for capital costs.
· Whenever possible, particularly for larger funding requests, local units of
government should be asked to prepare and finance predesign documents to
sufficiently explain the project purpose, scope, cost and schedule prior to submitting
capital budget requests. After predesign completion, requests should be submitted
through the official capital budget process.
· In the interest of forming true state-local partnerships, local governments should be
willing to provide substantial non-state funds as a condition of receiving state bond
appropriations. These local match requirements are expected to provide at least
50% non-state funding for project design and construction costs.
· To avoid overly-optimistic expectations among local governments, the state should
not provide partial appropriations for design funds in any given year unless the state
is fully prepared to provide subsequent construction funds. Design funding should
not be appropriated for the exclusive purpose of buying time, mollifying project
proponents or pushing project construction tails into future legislative sessions.
· Political subdivisions should develop a detailed operating plan that ensures local
funding of project operating expenses, without any state assistance.
11/20/97 02:11 PM
Grants to Political Subdivisions
Amateur Sports Hall of Fame (Elk River)
AGENCY CAPITAL BUDGET REQUEST
Fiscal Years 1998-2003
Dollars in Thousands ($137,500 = $138 thousand)
Project Narrative
PROJECT LOCATION: Elk River, Minnesota
AGENCY PROJECT PRIORITY: 1 of 1 (Elk River)
1998 STATE APPROPRIATION REQUEST: $2,000
PROJECT DESCRIPTION:
The proposed project consists of approximately a 59,500 square foot indoor sports
recreational facility and an adjacent 50,000 square foot air-supported dome to be
operated by the Minnesota Sports Federation (MSF). The facility will be constructed
on a 6+ acre site north of Interstate 94 and just south of Highway 10 in Elk River,
Minnesota. The site adjoins outdoor athletic fields and baseball/softball diamonds, is
next to the Sherburne County Fairgrounds, and across the street from Lake Orono
Park and Elk River City Hall.
The site has been chosen because it is geographically and demographically central
to the state; is in close proximity to the Twin Cities metro area; is located in
Sherburne County, the fastest growing county in the state; and is in a user-friendly
community which does not have a sport facility, which will assure daily usage and
activity. Within the facilities planned, all categories of the Minnesota Sports
Federation membership will benefit.
Indoor facility
4 basketball courts
2 batting cages
2 broomball/boot hockey rinks
Outdoor deck/patio
Sports bar/deli/concessions
Pro-shop
Video/game roorn/virtual golf
Lockers/showers
Kitchenette/multipurpose room
Horseshoe pits
Boys and girls club
Sports medicine clinic
8 volleyball courts
4 sand volleyball courts
Walking/running track
Miniature golf
Amateur Sports Hall of Fame/museum
Turf training area for clinics of all types
Wellness area/equipment
MSF administrative offices
Sauna/massage area
Racquet ball courts
Local athletic association office
Climbing wall
Air-supported dome
Air-supported dome (multiuse facility for softball, touch football, basketball,
volleyball, training, exhibitions, other team sports, etc.).
The indoor facility will be suitable for basketball, volleyball, touch football, softball,
floor hockey, soccer, roller hockey, wrestling, aerobic activity, and a variety of
coaches/players training and Iow organized games.
The amateur sports center will provide Sports Federation members with a plethora of
new opportunities. It will be a state-of-the-art facility that serves as a focal point for
the nonprofit organization's mission and ongoing goal of "Serving Minnesota through
sports".
Examples of programs that may be included in the sports complex are:
Players clinics/camps
Wellness clinics/seminars
Hitting and pitching clinics
State tournaments
Senior programming
Special population programming
Practice facilities
Arts & crafts shows
Dart tournaments
Youth and adult leagues
Flea markets
Therapeutic massage
Open gym
Coaches clinics/camps
Walking/running clubs
Personal/specialized training
Various national tournaments
Youth programming
Meeting facilities
Pool tournaments
Card games/tournaments
Foosball tournaments
"Lock Ins" (All night parties)
Sports exhibitions and party rentals
Injury rehabilitation
PROJECT RATIONALE AND RELATIONSHIP TO AGENCY LONG-RANGE
STRATEGIC PLAN AND CAPITAL PLAN:
The Minnesota Sports Federation's mission is to provide wholesome
amateur/recreational sports opportunities that promote fun, fitness, personal growth,
good sports and the development of lifetime leisure skills.
The MSF contributes to the quality of life in Minnesota by:
· promoting economic benefits through spod events;
· promoting social benefits through healthy sports activities;
· improving infrastructure through development sport facilities.
Importance of Amateur Athletics
The opportunity for youth and adults throughout Minnesota to participate in amateur
athletics provides great resources to the state and enhances the well being of its
citizens. Amateur athletics encourages health and vitality, mental and physical self
development, individual accomplishment, community involvement and teamwork,
11/18/97 02:43
Grants to Political Subdivisions
Amateur Sports Hall of Fame (Elk River)
AGENCY CAPITAL BUDGET REQUEST
Fiscal Years 1998-2003
Dollars in Thousands ($137,500 = $138 thousand)
Project Narrative
positive social values, and broadens the playing field by giving everyone a chance to
participate. This is especially true for females who, until recently, have had limited
opportunities available to them for participation in a variety of sports and athletic
events.
Amateur athletics is a vehicle for networking in the community. Athletes can find
jobs through friends and teammates and develop resources that can assist them in
their lives. Sports can also help build a sense of community and belonging that
individuals of all ages often find lacking in their everyday lives.
Necessity for a Multipurpose Sports Complex
Since it inception in 1982, the Minnesota Sports Federation has grown from an
organization serving 67,000 amateur athletes in Minnesota, to its current program
level of 232,000 participants. This growth has reflected the dramatic population
growth in the state during the same period. According to the Minnesota Department
of Tourism, "Between 1980 and 1994, Minnesota's population grew significantly
faster than any other Midwest state."
Team memberships in the Minnesota Sports Federation has also mirrored this
exciting growth over the past 15 years as seen in the following growth chart:
Year NumerofTeams
1982 4,461
1986 7,914
1991 9,588
1996 10,637
Dramatic growth in sports such as Junior Olympic Softball and youth basketball and
volleyball has placed great pressure on the organization to meet the increasing
interest and demand of amature athletes. Unfodunately, due to the lack of
availability and oftentimes prohibitive facility rental costs, the MSF is unable to
expand existing programs or initiate new ones that would greatly enhance
membership services and/or serve the needs of special populations and provide
greater gender equity.
In 1987 the Minnesota State High School League removed restrictions on off-season
play, thus allowing players the opportunity to hone skills in formal leagues and
camps throughout the year. As a result, participation in youth leagues and other
off-season camps and programs has skyrocketed.
The Minneapolis Star Tribune reported in February 1997 that "In many communities
in the metro area, participation is so great that youth directors are scrambling to find
gym space. This winter 1,200 boys and about 600 girls are playing basketball in
youth programs in Eden Prairie alone."
Female Participation in Amateur Athletics
Women and girls have become more involved in sports at alt levels throughout the
state since the inception of the 1972 Title IX law prohibiting gender discrimination in
educational institutions and the principle of gender equity that asserts the value of
equitable participation by, and treatment of, men and women in intercollegiate
athletics. Yet, a lack of sufficient and adequate sports facilities continue to limit
females interested in participating in amateur athletics.
The benefits to girls who participate in sports are impressive. According to the
Women's Sports Foundation, girls active in sports are 92% less likely to get involved
with drugs, 80% less likely to have an unwanted pregnancy and 3 times more likely
to graduate from high school. The Melpomene Journal reported in 1992 that girls
derive confidence in themselves and their ability from physical activity and positive
self-esteem through challenge, risk-taking experiences and skill development.
Women too are finding great benefits from active participation in sports. The
Women's Sports Foundation has stated that women who participate in sports have
high levels of self-esteem, less depression, and are more satisfied with their lives. In
addition, exercise has shown to reduce the risk of heart disease, breast cancer, and
other illnesses.
MSF is dedicated to providing greater opportunities for women and girls to actively
participate in sports. If additional indoor and outdoor amateur sports facilities were
available, the scope of MSF programs could be increased significantly in the areas
of sports tournaments for men and women of all ages, research, coaches/player
training, programs for the physically challenged and senior citizens' recreational
activities.
Activity Opportunities for the Physically Challenged and Mentally Disabled
As society has encouraged physical activity for those who are physically challenged
and mentally disabled, sports and recreation has become an integral part of their
everyday lives. Physical activity benefits these participants in several ways. While
physical activity stimulates systems of the body which may otherwise be unused, it
also helps a person to develop confidence, self-esteem and a sense of belonging
One problem has been a lack of facilities which allow the challenged and mentally
disabled population to experience multiple forms of activity. The variety of activi[ies
planned for the Minnesota Amateur Sports and Wellness Center will be appreciated
by the entire population. The ability to reach a segment of the population, which is
11/18/97 02:43 P
Grants to Political Subdivisions
Amateur Sports Hall of Fame (Elk River)
AGENCY CAPITAL BUDGET REQUEST
Fiscal Years 1998-2003
Dollars in Thousands ($'137,500 = $138 thousand)
Project Narrative
many times forgotten, is challenging, yet exciting. The Minnesota Sports
Federation's goal is simple - to enhance the lives of all members.
IMPACT ON STATE AGENCY OPERATING BUDGETS (FACILITIES NOTE):
No state operating funds are being requested with this project. All owner and
operating responsibilities would rest exclusively with the Minnesota Sports
Federation under an operating lease with the city of Elk River.
PROJECT CONTACT PERSON, TITLE, ADDRESS, PHONE, FAX, AND E-MAIL:
Perry Coonce, Executive Director
Minnesota Sports Federation
592 Dodge Ave NW
Elk River, MN 55330
(612) 241-1789
Patrick Klaers, City Administrator
City of Elk River
13065 Orono Parkway
P.O. Box 490
Elk River, MN 55330-0490
Phone: (612) 441-7420
Fax: (612) 441-7425
11/18/97 02:43 P
Grants to Political Subdivisions
Amateur Sports Hall of Fame (Elk River)
AGENCY CAPITAL BUDGET REQUEST
Fiscal Years 1998-2003
Dollars in Thousands ($137,500 = $138 thousand)
Project Cost
All Years and All Funding Sources All Prior YearsI I I IFY 1998-99 FY 2000-01 FY 2002-03 All Years (Month/Year} (Month/Year)
· Property Acquisition
Land, Land and Easements, Options $0 $531 $0 $0 $531
Buildings and Land 0 0 0 0 0
SUBTOTAL 0 531 0 0 531
Z. Predesign SUBTOTAL 0 10 0 0 10
3. Design Fees
Schematic 0 8 0 0 8
Design Development 0 12 0 0 12
Contract Documents 0 0 0 0 0
Construction Administration 0 95 0 0 95
SUBTOTAL 0 115 0 0 115 -
4. Project Management
State Staff Project Management 0 40 0 0 40
Construction Management 35 280 0 0 315
SUBTOTAL 35 320 0 0 355
5. Construction Costs
Site & Building Preparation 0 2,421 0 0 2,421
Demolition/Decommissioning 0 0 0 0 0
Construction 0 1,588 0 0 1,588
Infrastructure/Roads/Utilities 0 0 0 0 0
Hazardous Material Abatement 0 0 0 0 0
Construction Contingency 0 0 0 0 0
SUBTOTAL 0 4,009 0 0 4,009
6. Art SUBTOTAL 0 0 0 0 0
7. Occupancy
Furniture, Fixtures and Equipment 0 605 0 0 605
Telecommunications (voice & data) 0 0 0 0 0
Security Equipment 0 0 0 0 0
Commissioning 0 0 0 0 0
SUBTOTAL 0 605 0 0 605
8. Inflation
Midpoint of Construction 05/1999 ~
Inflation Multiplier
~ ;, :,~ :~, : ~,~;: 9.40% 0.00% 0.00% ·
Inflation Cost SUBTOTAL
525 0 0 525
9. Other SUBTOTAL 0 0 0 0 0
G~ND TOTAL $35 $6,115 $0 $0 $6,150
11/18/97 02:43 P
Grants to Political Subdivisions
Amateur Sports Hall of Fame (Elk River)
AGENCY CAPITAL BUDGET REQUEST
Fiscal Years 1998-2003
Dollars in Thousands ($137,500 = $138 thousand)
Project Detail
CAPITAL FUNDING SOURCES Prior Years FY 1998-99 FY 2000-01 FY 2002-03 TOTAL
State Funds:
G.O Bonds/State Bldgs 0 2,000 0 0 2,000
State Funds Subtotal 0 2,000 0 0 2,000
~,gency Operating Budget Funds 0 0 0 0 0
:ederal Funds 0 0 0 0 0
_ocal Gov't Funds 0 2,526 0 0 2,526
3rivate Funds 35 1,589 0 0 1,624
Dther 0 0 0 0 0
TOTAL 35 6,115 0 0 6,150
IMPACT ON STATE Current Projected Costs (Without Inflation)
OPERATING COSTS FY '1998-99 FY 1998-99 FY 2000-01 FY 2002-03 FY 2004-05
Compensation -- Program and Building 0 0 0 0 0
Operation
Other Program Related Expenses 0 0 0 0 0
Building Operating Expenses 0 0 0 0 0
State-Owned Lease Expenses 0 0 0 0 0
Nonstate-Owned Lease Expenses 0 0 0 0 O
Expenditure Subtotal 0 0 0 0 0
Revenue Offsets 0 0 0 0 0
TOTAL 0 0 0 0 0
Change from Current FY 1998-99 ?~!: i~?::'~<~:i~i,'~i 0 0 0 0
Change in F.T.E. Personnel 0.0 0.0 0.0 0.0
SOURCE OF FUNDS FOR
DEBT SERVICE PAYMENTS Percent of
(For bond-financed projects) Amount Total
General Fund 2,000 100.0%
User Financing 0 0.0%
STATUTORY AND OTHER REQUIREMENTS
Project applicants should be aware that the following requirements
will apply to their projects after adoption of the bonding bill.
Yes MS 16B.335 (la): Construction/Major
Remodeling Review (Legislature)
No MS 16B.335 (lb): Project Exempt From This
Review (Legislature)
No MS 16B.335 (2): Other Projects (Legislative
Notification)
Yes MS 16B.335 (3): Predesign Requirement
(Administration Dept)
Yes MS 16B.335 (4): Energy Conservation
Requirements (Agency)
No MS 16B.335 (5): Information Technology Review
(Office of Technology)
Yes MS 16A.695: Use Agreement Required
(Finance Dept)
Yes MS 16A.695: Program Funding Review Required
(Agency)
Yes Matching Funds Required (as per agency
request)
11/18/97 02:43 P
Grants to Political Subdivisions
Amateur Sports Hall of Fame (Elk River)
AGENCY CAPITAL BUDGET REQUEST
Fiscal Years 1998-2003
Dollars in Thousands ($137,500 = $138 thousand)
Project Analysis
Department of Administration Analysis:
Without predesign being submitted in advance of the request the request cannot be
adequately reviewed.
Department of Finance Analysis:
The strategic linkage of this project to state services and policy objectives is unclear.
The project is viewed as primarily a local-benefit project, with some potential for
regional significance.
The linkage of this facility with programs and services offered by the Minnesota
Amateur Sports Commission is also unclear. Why has this project not been
recommended by the Minnesota Amateur Sports Commission or carried within its
1998 capital requests?
The project complies with the Department of Finance recommendation that local
units of government share project costs through at least a 50% non-state funding
match and the city has prepared a program plan identifying how on-going operating
expenses in this facility will be funded. However, project sponsors should consider
preparing a predesign study prior to consideration of this request for any funding in
the 1998 legislative session.
Project request forms should be amended to clarify the following:
· The construction cost identified in item five on the project cost form does not equal
the construction cost on the project construction form (i.e., the project construction
form has not been completed).
· Start and end dates for all cost items must be identified on the project cost form.
· The inflation adjustment, as originally proposed, was inconsistent with the
appropriate inflation percentage for a project with a May, 1999, midpoint of
construction. As such, the inflation amount now shown on the project cost form has
been updated by DOF to the correct amount.
Governor's Recommendation:
STATEWlDE STRATEGIC SCORE
Criteria Values Points
Critical Life Safety Emergency - Existing Hazards 0/700 0
Critical Legal Liability - Existing Liability 0/700 0
Prior Binding Commitment 0/700 0
Strategic Linkage - Agency Six Year Plan 01401801120 0
Safety/Code Concerns 0/35/70/105 0
Customer Service/Statewide Significance 0/35/70/105 35
Agency Priority 0125150/751100 50
User and Non-State Financing 0-100 67
i State Asset Management 0120/40/60 0
State Operating Savings or Operating Efficiencies 0120140160 0
Contained in State Six-Year Planning Estimates 0~25~50 0
TOTAL 700 Maximum 152
11/20/97 02:39 PM
Grants to Political Subdivisions
Amateur Sports Hall of Fame (Elk River)
AGENCY CAPITAL BUDGET REQUEST
Fiscal Years 1998-2003
Dollars in Thousands ($137,500 = $138 thousand)
Project Construction
CONSTRUCTION NEW CONSTRUCTION REMODELED ASSET PRESERVATION
TYPE OF SPACE EXISTING (FY 1998-99) (FY 1998-99) (FY 1998-99)
Cost Per Cost Per Cost Per TOTAL
List Major Type of Space Gross Sq. Gross Sq. Cost Sq. Foot Gross Sq. Cost Sq. Foot Gross Sq. Cost Sq. Foot COST
(Office, Lab, Ramp, etc.) Feet Feet (in $000) (in $) Feet (in $000) (in $) Feet (in $000) (in $) (in $000)
TOTAL 0 0 0
....... ? o o o o ,~ o
11/18/97 02:43 P
State of Minnesota
Department of Finance
400 Centennial Building
658 Cedar Street
St. Paul, Minnesota 55155
Voice: (612) 296~5900
Fax: (612) 296-8685
TTY: 1-800-627-3529
November 26, 1997
Mr. Patrick Klaers
City Hall Administrator
13065 Orono Parkway
PO Box 490
Elk River, MN 55330-1900
Regarding: use of state bond-financed property
Dear Mr. Klaers:
The City of Elk River has submitted a capital budget request to the Department of Finance for
consideration for inclusion in the Governor's proposed capital budget to the 1998 Minnesota
Legislature. The Minnesota Legislature is expected to approve a capital budget in the 1998
Legislative Session, and should your project be approved by the Legislature, Elk River will be
entering into a grant agreement with a designated state agency, which will provide the terms and
conditions under which the grant is made.
Your capital budget request indicates that your community expects to enter into an agreement with
the Minnesota Sports Federation to operate a program within the indoor sports recreational facility
and dome. The purpose of this letter is to make you aware of the responsibilities Elk River must
agree to before the State would enter into a grant agreement with you to disburse the state bond
funds. We are telling you about these requirements because similar projects were approved in the
1994 and 1996 capital budgets where the communities did not understand the responsibilities they
must agree to as the recipient of state general obligation bond proceeds.
Some communities, that have received approval for facilities that will be utilized by a non-profit
organization, mistakenly believe that their sole responsibility is to receive the state money and turn
it over to the non-profit organization to build the facility. The community believes that they have no
ongoing responsibilities. This is not correct.
The use of state general obligation bond proceeds is controlled by the Minnesota State Constitution,
Minnesota Statute 16A. 695 and the Order of the Commissioner of Finance Relating to Use and Sale
of State Bond Financed Property. A copy ofM. S.16A.695 and the Commissioner's Order were
included in the capital budget request form package.
The Constitution requires that facilities financed with general obligation bond proceeds must be
publicly owned. The Constitution does not allow state bond-financed property to be owned by a
non-profit organization, nor does it allow the community which owns the facility to enter into a long-
AN EQUAL OPPORTUNITY EMPLOYER
Use of state bond-financed property
Page Two
term use or lease agreement where the term is equal to the expected life of the facility. The guideline
used by the Department of Finance is that a use or lease agreement cannot be for a term of more than
one-half the expected life of the facility.
A community can sell bond-financed property only when it determines that the public program
operated within the facility is no longer needed, the facility is sold for fair market value and the sale
is approved by the Commissioner of Finance. Therefore, a community cannot enter into an agreement
to sell a bond-financed facility to the non-profit organization for a set amount at some future time.
A second constitutional provision requires the state bond proceeds be used to finance the acquisition
or improvement of a capital nature. In the course of conducting our review of your request, we will
need to be assured that all of your project costs to be financed by state bonds meet this requirement.
A third constitutional requirement is that there must be a governmental program operated within the
facility. Elk River must be authorized by law to operate the governmental program which is proposed
for the facility and must be responsible for the continued operation of the governmental program.
This may mean that the program operated by the non-profit organization becomes the governmental
program and your community must have ongoing control of the program. It is like any department
of your city which must annually have a budget approved by your city council. The ultimate decision-
making authority for the program must be with your city council.
Further, should the Minnesota Sports Federation no longer operate the governmental program for
you, then you have the responsibility to continue the operation of the program or find another
organization to run the program for you. The State's policy, as stated in the grant agreements, is the
local government must repay to the state the amount of the grant should the governmental program
be terminated.
I would suggest that you consult your legal advisors on the responsibilities your community will
assume should it receive bond funds for your proposed project, and to be certain that you will wish
to continue to make an application for such funds. Peter Sausen, Assistant Commissioner, is available
to discuss these issues with you. His phone number is 612-296-8372.
Warmest regards,
Wayne Simoneau
Commissioner
~EC--05--97 83:28 PR PELSTRIN~O1 550~221 P. 02
PE:LSTRING CAPITAL CORPORATION
4205 L:,ncaster Lane North .a~$uite I I00~ Minneapolis. ,',IN 554.41
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
Perry Coonc¢, Minnesota Sports Federation
Pat Klaers, City Administrator, City of Elk River
Patrick P¢Istring, Pelstring Capital Corporation
December 3, 199'7
Department of Finance/State Bonding
I wanted to provide a summary of my discussions regarding the response from the
Department of Finance to our submission of the Minnesota Sports Federation/City of Elk
River project. In general, there are two broad areas of review which need to be addressed
over the next 60 to 90 days. I have separated these areas for review in this memo.
DEPARTMENT OF FINANCE SUBMIITAL
I had a lengthy conversation with Lee Mehrkens regarding the scoring and questions
raised by the Department of Finance to the submission. Their initial response raised
four issues which, in general, should be addressed, Our application meets three out of
the four requirements. We have not however, completed the "pre design" as requested
by the Department of Finance.
Mr. Mehrkens verified that the "pre design" does not need to be completed by Friday,
December ~5. Instead. they would request that the pre design be completed and be
submitted to the Department of Administration prior to legislative hearings beginning in
late January or early February. After discussions with Mr. Mehrkens. he was
favorably impressed with the level et'design and project costing completed to date.
Further follow-up on this issue needs to be co~ducted with Wes Chapman at thc
Department of Administration.
Mr. Mchrkens strongly suggested thn~ ~lle whole process for seeking state bonding has
moved beyond thc original legislative intcnl. Thc legislature hits determined to fund a
number of projects, which do no~ rcceix ~ Del~artmcnt et' finance/Governor Carlson's
recommenclo, tions. Their analysis i.,, ti~:d to ~.r¢ traditional criteria and tt~¢y expect to
officially "recommend" only a small pcr,.'entagc of the S~00.000.000 of submittals. As
~612) 550-7980 =,~ 800-642-625g ~. ~612~ $50-9221 Fax r~a pelstring@earthlink.net
DEC-83-97 03:29 PM PELSTRIN~01 5509221 P.03
such, we should proceed to resubmit. All requests will go to tile legislature for
committee review and hearings.
He did suggest some modifications, which will' have thc impact of emphasizing a
broader statewide h'npact for the project. We can review these suggestions at our
meeting today.
He dso raised the issue of Minnesota ^mateur Sports Commission's role in the
process. The MASC has been successful in achieving legislative approval without
recommendations from Department et' Finance. As a state agency, however, thc
Department of Finance believes that MASC should review this proposal. We should
develop a strategy to address this issue prior to legislative hearings.
In summary, the modiRcations required r'or Friday's resubmission are relatively
modest. They have raised thc issue, however, of addressing the issues of pre design
Itudy, discussions with MASC. and building legislative support for this project over the
next 60 days prior to committee hearing.~.
STATUTORY REOUIREMENTS FOR CITY/Sp_ORTS FEDERATION
RELATIONSHIP
Patrick KJaers, City Administrator for the City of Elk River. received the attached
letter for Commissioner Simoneau regarding the statutory requirements that the city
will need to undertake to assure the availability of the bond proceeds. These
transactions are governed by state constitution and a number of regulations must be met
to qualiFT for the funding.
After a review of the issues and a discussion with Pat Klaers. the rnost serious issue
appears to be the requirement that thc lease must be structured as an "operating lease"
and that the facility, if ultimately sold, should be sold at a fair market value and the sale
must be approved by the Commissioner of Finance. Clearly, the City becomes the
owner of the facility and needs to take the responsibility for the facility, wi~h this
understanding.
In further discussions with Mr. Mehrkens. he admitted that thc nature of these lease
relationships vary significantly, depending upon the agency and non-profit relationship.
We obviously need to meet the statutory requirements, but it appears the long-term
relationships and commitments can be structured to meet thc needs of the city and the
Sports Federation.
In the short term. thc resubmittal this Fridnv should be n[tninahle. Tile process.
however, suggests that additional activilies ~'¢garding verifying project cost and
legislative support will require continuing, on-going activity.
December 5, 1997
PUBLIC RESOURCE
GROUP, INC.
Bt~siness Development & Finance Specialists
Mr. Wayne Simoneau
State of Minnesota Department
: Of Finance
400 Centennial Building
658 Cedar Street
St. Paul, MN 55155
Re.'
City of Elk River/Minnesota Sports Federation
Minnesota Amateur Sports and Wellness Center
Dear Mr. Simoneau:
On behalf of the City of Elk River and the Minnesota Sports Federation we are
submitting a revised Agency Capital Bonding Request.
We wanted to emphasize the direct applicability of this project to the Department of
Finance guidelines and overall state impact. For purposes of clarity, I wanted to
respond to the four issues of your Nove~nber 21, 1997 memo.
1. Political subdivisions should fund local projects t6 the fullest extent possible before
requesting state assistance for capital costs.
The private and local public participation in this project exceeds state guidelines. The
City of Elk River has committed to up to co,tribute $2,000,000 of bonding authority
and a parcel of land valued at $526,000. The Minnesota Sports Federation has
committed to contribute capital contributions of $1,624,000. As such, the state bonding
request is less than 1/3 of the capital cost, versus a state maximum guideline of ~ of
the cost.
2. Local governments should provide, at minimum. 50% local match funding for
capital costs.
4205 Lancaster Lane Norrh~ Suite 1D0 · Minneapolis, Minnesota 55441 · (612) 550-7979 · (612) 550-9221 Fax
The local government match of $2,526,000 exceeds the state bonding request and
represents more than 50% of the public contribution to the project.
3. A predesign study should be completed tbr each project prior to consideration of the
request in the 1998 legislative session.
A predesign study has not been officially completed in conjunction with the Minnesota
Department of Administration. The Minnesota Sports Federation and City have
retained an architectural firm, completed preliminary architectural design, and
obtained cost estimates from two construction companies. The City/MSF will proceed
to complete the predesign study prior to legislative hearings by late January.
4. All on-going operating costs of the project should be financed locally, without state
assistance.
The City/MSF have not requested any state assistance for any on-going operating costs.
All operating costs will be the responsibility of the Minnesota Sports Federation,
supported by the City of Elk River.
We also wanted to clarify the implication of the project, as it relates to the statewide
impact. This project will be the first full scale facility which focuses on the following
four areas:
Youth Basketball and Volleyball Tournaments - Statewide and National.
(boys and girls under 16)
· Indoor Softball/Baseball Tournaments - Statewide and National.
Indoor Basketball/Volleyball venue for the Minnesota Special Olympics .~-
Statewide tournaments
Amateur Sports Hall of Fame - tbcusing only on those athletes never
participated professionally.
The Minnesota Sports Federation has been operating its programs throughout the State
of Minnesota for over 15 years and its statewide constituency represents nearly 250,000
members and annual participants in its programs throughout the state. This facility will
demonstrate a strong regional and statewide impact in delivering recreational services
for these programs. The Minnesota Sports Federation's history represents over 56
statewide and national tournaments, whi,:h will bc coordinated through this facility.
We also are working to meet with representatives of the Minnesota Amateur Sports
Commission within the next two weeks. We would agree that this project should be
discussed with MASC so that they can evaluate the project in light of overall state
recreational facility needs.
We have appreciated the cooperation of the Department of Finance, the Department of
Administration in this process. We look forward to working with you and seeking
legislative approval for the project.
Sincerely,
Partner
Cc:
INC.
Pat Klaers, City of Elk River
Karen Larson, Minnesota Sports Federation
AGENCY CAPITAL BUDGET REQUEST
Building Project Detail (Cont'd)
Fiscal Years 1996-2001
Dollars in Tbousmtd ($137,500 = $138)
AGENCY: Cit.,,' of Elk River/Die Minnesota Sports Federation
PROJECT TITI,E: Minnesota Atnateur Spoils and Wellness Center and Amateur
Spoils Hall of Fame.
STATE APPROPRIATION REQUEST FOR 1998 SESSION: $2,000.000
STATE APPROPRIATION ESTIMATE FOR 1999 SESSION: $0
STATE APPROPRIATION ESTIMATE FOR 2000 SESSION: $0
LOCATION {CAMPUS. CITY, COUNTY): Cily of Elk River
AGENCY PRIORITY (for all projccls in lite 1998 session only):
~ I of I rcq.csls
I. PROJEC'F DESCRIPTION:
Thc proposed clcxclopmcnl prqiccl consisls of al~proximately a 59.500 square fool
indoor sporls rccrcalional filcililv and an ad. iacenl 51k000 sqnarc fool air snppoiled
dome Io be oxxncd by lite Cilv of Elk River and operaled by Ihe Minnesota Spoils
Federation. The fi~cililv will be constmcled on a 6+ acre silo noilh of Imerslale 94
and just soulh of ltigbx~ay I0 iii Elk River. Minuesola. The silo ad. loins outdoor
alblelic fields and baseball/softball tliamonds, is nexl to the Sherbume County
Fairgrounds. and across lite slreel from Lake Orono Park and Elk River Cily Hall.
Thc Minncsola Sports Fcderalion has been operating ils programs throughout lite
Slale of Minncsola for over 15 years and its stalewide constituency represents nearly
250.000 members and annnal participanls in its programs Ihroughout the slate. This
facililv will dcmonslmle a slrong regional and slatewidc impacl in delivering
recrealional sen'ices. Thc Minnesota Sporls Fedcmlion's hislory represents over 56
statexvide and national tountamenls, which can be coordiualed Ihrough lids facility.
The primar5' focus of lite facility will be lo sene lite following four areas:
Youth Basketball and Volleyball Tournaments - Statewide and
National. (boys and girls under 16)
Indoor Softball/Baseball Tournaments - Statewide and National.
Indoor Basketball/Volleyball venue for the Minnesota Special
Olympics - Statewide tournaments
Amateur Sports Hall of Fame - focusing only on those athletes
never participated professionally.
The Minncsola Sports Federation Ires been operating its programs throughoul lite
State of Minnesota for over 15 years and ils slalewide constituency represenls nearly
250,000 members and annual participants in ils programs thmughoul the slate. This
facilily will demonslmle a strong regional and slatewide impact in delivering
recreational sen'ices in these areas. The Minnesota Sports Federalion's history
represents over 56 statewide and national Ioumaments. which can be coordimated
through Ihis facilily.
This silc bas been chosen because ii is geographically and dcnlogml~hically central Io
lhe stale; is in close proximily Io lite Txvin Cities Metro Area: is Iocalcd iii Sherburne
Cotmly. Ibc fitsl groxving conntv itt Ibc slate: and is iii a user friendh' communilv
which docs not have a spoils facility, xvbich will assure daily usage and aclivil~.
Willfin Iht filcililies planned, all calcgories of Iht Minnesola SporlS Federalic~n
men~bcrship will benefit.
2. PROJECT RATIONALE AND REI~ATIONSIIIP TO AGF, N(?Y LONG-
RANGE STRATEGIC GOALS AND CAPITAL PLAN:
The Mimtcsola Sports Federalion's mission is !o provide xvholcsomc
anmleur-recrealional sports opportunities Ibat promolc tim. fitness, ix:rsonal growth,
good spoils and lite dcveloplnent of lifetime leisure skills.
Thc MSF conlfibulcs lo lite qualily of life in Minncsola by:
· Promoting economic benefits Ihrougb spoil evenls.
· Promoting social benefils through healthy sport activities.
· Improving infrastructure through development spoil fitcililics.
Imporlance of Amateur Alhlelics
The opporlunity for yonth and adnlls Ihroughoul Minnesota Io parlicipale iii amalcur
afltletics provides great resources to lite state and enhances lite well being of its
citizens. Amateur aflfletics encourages heallh and vitalilv, mental and physical self
developmenl, individual accomplislunenl, community in~,olvement and t~amwork,
positive social valncs, and broadens the playing field by giving eveD. one a chance to
participale. This is especially tree for females who, until recently, have had limited
opportunities available to them for participation in a varie ,ty of sports and athletic
events.
A unique feature of this complex will be tile eslablishment of file Minnesota Amateur
Sports Hall of Fame. The Minnesota Sports Federation has been entrusted with
memorabilia from Minnesota Amateur athletes, which has significant over the past
50 years. Additionally, the vast nnmber of its statewide participants assures the
expansion of the Hall of Fame into a statewide attraction.
Necessity for a Statewide Youth Oriented Sports Complex
Since its inception in 1982 tile Minncsola Sports Federation has grown from an
organiz~tion serving 67.000 amatcnr arltlctcs in Minnesota lo its currcnl program
level of 232.000 participants. This groxxlh has reflected tile dramatic population
groxxlh in Ihe state daring the same period. According to the Minncsola Department
of Tourism "belxvecn 1980 and 1994. Minnesota's population grew significantly
raslcr Ihan am,' olher Midxx'cst slate."
Tcmn nlcmbcrships in Ibc Miuncsota Sports Federation have also mirrored this
cxciling groxxth ovct thc pasl fifteen .x cats as seen in Iht folloxving grox~lh chart:
Year
1991
1996
Nunlbcr of Tea]ns
4.461
7,914
9,588
10,637
Dtmnalic groxvlb in sports such as Junior Olympic Softball and voulh baskclball and
volleyball has placed grcal pressure on Ihe organization meel the increasing inlercsl
and demand of amateur athletes. Unfortunately due to Ihe lack of availabililv and
oftentimes prohibilive facility renlal costs, lite MSF is unable to expaud exisiing
programs or iniliale new ones Ihal would greally enhance membershii) sen'ices
and/or serve lite needs of special populations and provide greater gender equity.
lit 1987 Iht Minnesota Slalc High School League removed restrictions on off-season
play Ihus allo~ving players lite opportunily Io hone skills in formal leagues and camps
Ii~roughout the year. As a result participation in youth leagues and other off-season
camps and programs has skyrocketed.
The Minneapolis Star Tribune reported in February 1997 that "ltl many communities
in the metro area, participation is so great that youth directors are scrambling to find
g)nn space. This winter 1,200 boys and about 600 girls are playing baskclball in
youth progrmns in Eden Prairie alone."
Of particular i~nportance is the requirement for high qualib' vennes for slalcwidc and
national tournaments. The Minnesota Sports Federation has a strong bi~ory or
organizing and coordinating these t3~es of tournaments, xx~th 56 such tournaments to
its credit over the past 15 years. With this new facility the Sports Federation expects
to increase its statewide tournament schedule lo between 8 and 10 per year. with an
additional 3 to 5 national tournaments.
Female Participation in amateur Athletics
Women and girls have become ~nore involved in sports al nil levels Ihroughopl Iht
state since the inception of the 1972 Title IX law prohibiting gender discrimination
in educalional inslilutions and the principle of gender equity that asserts Ihe value of
eqnitnble parlicipation by. and Irealmenl of. men and women in inlercollcgialc
athlelics. Ycl. a lack of snfficienl and adeqnate sports facilities conlinuc 1o limil
females inlcresled in participaling iu amalenr alhlelics.
Tile bcncfils Io girls who parlicipale in sporls ;irc impressive. According Io Iht
Womcn's sports Foundalion girls aclive in sports are 925'0 less likely to gel involx cd
xvilh drags. 8o% less likely Io have an nmvanlcd pregnancy and Ihree limes more
likeh' !o gmduale from high school. The .~ h'lpomene.hmr, al rcporlcd i. 1992 Ihal
girls derive confideuce iu lhemseh'es and Iheir abililv front physical aclivilv and
positive self-esteem through challenge, risk-laking experiences and skill
developmenl.
Women !oo are finding greal bencfils from aclive participalion itt sports. Thc
Women's Sporls Foundalion has slated thai xL'omen who participate in spoil have
high levels of self-esteem, less depression, and are more satisfied Lvilb Iheir lives. In
addition, exercise has shoxvn lo reduce lite risk of heart disease, breasl cmlcct, and
olher illnesses.
MSF is dedicated lo providing greater opporlnnities for women and girls Io aclivcly
participale in sports, lu additional indoor and ontdoor amalcur sports filcililics were
available, the scope of MSF programs could be increased significanlly itl Ihe areas of
spoils Ioumamenls for mca and WOlnen of all ages. research, coaches/player Iraining.
progrmns for the physically challenged and senior cilizens' rccrealional activities.
Activity Opportunilics for Ihc Pcoplc with Special Nccds
As society has encouraged physical activiv,.' for people with special needs, sports and
recreation has become an integral part of their everyday lives. Physical activity
benefits these participates in several ways. While physical activity stimulates
systems of the body which may othenvise be unused, it also helps a person to
develop confidence, self-esteem and a sense of belonging. One problem has been a
lack of facilities, which allow the challenged and mentally disabled population to
experience multiple forms of activity. The variety of activities planned for the
Minnesota Amateur Sports and Wellness Center will be appreciated by the entire
population. Thc ability to reach a segment of the population which is many times
forgotten is challenging, yet exciting. The Minnesota Sports Federation's goal is
simple - to enhance the lives of all members.
Minnesota Sports Federation has a long standing, cooperative relationship wilh the
Special Olympics. This facility will provide a venue for stalewide Special Olympics
events which previously has been unavailable.
IMPACT ON AGENCY OPERATING BUDGE1' (FACILITIES NOTE):
There is no imp;icl on am' si;Itc agency opcraling bridget. All owner and operaling
rcsponsibililics would rcsl exclusively x~ilh lire Minncsola Sports Federation m~dcr
an operating lease x~ ith Iht City o1' Elk River.
PREVIOUS PROJECT FUNDING:
NOlIC :
OTHER CONSIDERATIONS (OPTIONAL):
N/A
PROJECT CONTACT PERSON. TITLE. AND PHONE:
Karen Larsen. President.
Mim~csola Sports Federation (612) 921-5810
(612) 454-0438
Palrick Klacrs, City Administrator
City of Elk River
(612) 441-7420
Activity Opporlunities for the PeoPle with Special Needs
As society has encouraged physical activity for people xvith special needs, sports and
recreation luas become an integral part of their eveR,day lives. Physical activity
benefits these parlicipates in several ways. While physical activity stimulates
systems of the body which may otherwise be unused, it also helps a person to
develop confidence, self-esteem and a sense of belonging. One problem has been a
lack of facilities, which allow the challenged and mentally disabled population to
experience multiple forms of activity. The variety of activities planned for the
Minnesota Anmteur Sports and Wellness Center will be appreciated by the entire
population. The ability to reach a segment of the population which is many times
forgotten is challenging, yet exciting. The Minnesota Sports Federation's goal is
simple - to enhance the lives of all members.
Minnesola Sporls Federalion has a long standing, cooperalive relalionship with Ihe
Special Olympics. This facility will provide a venue for slatewide Special Olympics
evenls which previously has been unavailable.
3. IMPACT ON AGENCY OPERATING BUDGET (FACILITIES NOTE):
Thcrc is ,m iml);~cl on ;my slalc agcnc3.' opcraling bndgct. All oxvncr and operaling
rcspol~sibililics would rcsl cxclnsivclv xxith thc Minncsola Sporls Fcdcralion undcr
;m opcrali~g Ic;~sc with thc Cily of Elk River.
PREVIOUS PROJECT FUNDING:
None
OTHER CONSIDERATIONS (OPTIONAL):
N/A
PROJECT CONTACT PERSON. TITLE, AND PHONE:
Karen Larsen. Presidenl,
Mim~esola Sporls Federation (612) 92 !-58 l0
(612) 454-0438
Patrick Klaers, City Administrator
City of Elk River
(612) 441-7420