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04-09-2013 ICE MIN MEETING OF THE ELK RIVER ICE ARENA COMMISSION HELD AT CITY HALL APRIL 9TH, 6:00PM Members Present: Chair Martin, Vice Chair Johnson, Commissioners, Cunningham, Westgaard, Ballenger(arrived at 6:24pm), Givens(left at 8pm), Holmgren Members Absent: None Staff Present: Arena Manager Rich Czech, Arena Assistant Laura Estby, Finance Director Tim Simon, Parks and Recreation Director Michael Hecker, City Administrator Cal Portner 1. Call Meeting to Order Pursuant to due call and notice thereof, the meeting of the Elk River Ice Arena Commission was called to order at 6:06 p.m. by Chair Martin. 2. Oath of Office to New Commission Members Commissioner Cunningham sworn in. 3. Consider Agenda MOTION BY COMMISSIONER CUNNINGHAM AND SECONDED BY VICE CHAIR JOHNSON TO APPROVE THE APRIL 9, 2013 AGENDA MOTION PASSES 6-0. 4. Approve 11/11/12 Ice Arena Commission Minutes MOTION BY COMMISSIONER CUNNINGHAM AND SECONDED BY VICE CHAIR JOHNSON TO APPROVE THE NOVEMBER 11, 2012 ARENA COMMISSION MINUTES. MOTION PASSES 6-0. 5. Open Forum None 6. Financial Update 1 Finance Director Tim Simon states that the results of 2012 operation are in and reflected in the financial attachment to the arena commission packet.The arena is a special revenue fund meaning it has cash flow from an operations standpoint, but it has needed a transfer at the end of the year to cover the debt service. The debt service was paid off in 2011, so when the arena has profits now, it is kept in the arena's account for upcoming CIP projects or to offset any possible loss in revenue. From a revenue standpoint, the arena was up in ice rental but lower in rec programs(this is a direct corolation as the Figure Skating Club began teaching some classes formerly taught by Arena Coaches). Admission to high school games as well as advertising revenue has also increased. From an expenditure standpoint, Simon notes that Personal Service referrers to staff salaries. He notes that the operating expenditures were more than expected, however, utilities saw a 5% increase instead of a 3%increase which is what we had budgeted for. (Commissioner Ballenger arrives) The concessions stand had a $25,000 profit, and overall the arena had a net income of$148,479. The bleacher fund (surcharge on high school game tickets) is at$7,732.00. For 2013 we have $357,300 in capital outlay which includes a new roof for the barn and a dehumidifier, which means we may have to transfer money in from the liquor store fund. The commission acknowledges Arena Manager Czech for a job well done. Commissioner Westgaard inquires about the cost of an advertising "wrap" for the Zamboni as he feels there may be an opportunity with Hockey Day in MN if we used it at the Handke Pit. Arena Manager Czech notes that our Zamboni's are battery run, so we would have to take into consideration keeping them charged and warm from the elements. Typically, he notes, a propane Zamboni is rented for Hockey Day in MN. Commissioner Givens inquires if the 2013 Ice rental forecast includes the loss of revenue from Elk River Youth Hockey. 2 Commissioner Ballenger states that Mite level parents did feel that the season was a little short this year. They are planning on doing an online survey, and thinking of having some mite tournaments. 7. Action Items 7.1 Set ice rates for 2013-2014 season Currently, the rates are $180/hour for prime (when school is in session from 2:30pm-9:59pm) and $145/hour for non prime. Arena Manager Rich Czech notes that the Foundation Hockey Group accounts for much of the large bump in ice sales. Vice Chair Johnson notes that tonight's vote will effect rates for 2 years. If we figure 3% a year for inflation, and we raised the rates $10/hour that would only cover 5% of the inflation. Czech cautions against raising the rates $10 as it makes it very hard on the major user groups. Commissioner Givens asks if it is easier to raise it $5 per year? Commissioner Ballenger notes that Youth Hockey is going to ask a lot of their families this year with "Hockey Day in MN", and that they already had to charge their players more this year. Chair Martin inquires about switching to a one year plan with ice rates. Czech notes for the record that typically rates are raised by $5 every two years. Chair Martin suggests that non-prime hours stay the same to encourage people to buy ice during summer and off season times. Commissioner Cunningham questions if we made money and sold more ice at $180 an hour, do we need to raise the cost? Commissioner Givens notes, that there isn't any more prime ice available to buy. Commissioner Ballenger notes that Youth Hockey might buy more ice if the rates stayed the same. 3 Czech notes that in the past we have held the rates with the promise that youth hockey would assist the Arena's programs, however it has never come to pass. Commissioner Westgaard notes that a business's philosophy determines their rates. If the arena considers itself a business that supports itself, then the rates should be raised until we don't sell out. However, if we are viewing ourselves as a parks and recreation amenity then our rates should reflect that. Chair Dale Martin notes that due to the number of capital projects in the near future, he doesn't believe that the city council would like it if we didn't' raise the rates. Commissioner Westgaard suggests keeping the prime rates the same for Youth Hockey, the Figure Skating Club and the High School but raise the rates for other users? Parks and Recreation Director Michael Hecker notes that there is a difference in rates for ball fields depending on the user. Czech notes that keeping the rates the same for the major usergroups would be a feel good move, but that most of our additional revenue has been from local groups, we are not bringing in outside customers. Commissioner Westgaard inquires about the wording of our contracts, and how it is possible that Youth Hockey gave us back so many hours. Arena Manager Czech notes that typically we give them until October l51 to turn back ice hours, and typically there isn't much change, however this year was an exception. City Administrator Cal Portner notes that we are really trying to break even. With major capital outlays coming up, we aren't making money as much as we are saving it for the projects that will need to be done. Commissioner Westgaard states the rental rate should reflect the quality of the building, to which Czech replies that our ice is in better shape than most rinks with higher rates. Commissioner Westgaard asks about other"comparable" rinks with debt 4 services, and if they are able to stay afloat. Portner replies that those figures are all over the place, and that Youth Groups aren't growing as fast. Commissioner Ballenger notes that Elk River Youth Hockey is one of the Fastest growing in the state. Czech notes that the ice sales did not reflect an increase in Youth Hockey's membership. Ballenger notes that they bought ice in Princeton. Commissioner Cunningham asks what the arena did to increase ice sales this year. Arena Manager Czech notes that a majority of increase was in summer ice, and reiterates that slow and steady increases in the ice rates are easier for our user groups to handle. Chair Martin notes that if we kept our rates the same, that we would have lowest rates of the comparable ice arenas (ones in which there are not special arrangements with youth hockey or non profits.) Commissioner Givens states that larger user groups can handle an increase easier, and that the Figure Skating Club only has 40 members so it means more for fewer people when there is an increase. That being said, we have to be moving forward with capital projects, and suggests keeping the non- prime hours the same to try to continue selling more ice. Czech notes that we used to require a certain amount of non prime hours with prime hours purchased. Prime hours typically end at 9-10 or 9:15- 10:15. Commissioner Cunningham suggests selling after 10:15? Commissioner Westgaard inquires if our hourly rate comparables are single or double sheets, and states that Elk River residents pay regardless, if the arena isn't profitable, then it is covered by the taxbase. MOTION MADE BY VICE CHAIR JOHNSON TO RAISE PRIME RATES TO $185/HOUR AND KEEP NON PRIME RATES AT $145 5 FOR THE NEXT YEAR AND REVISIT THE RATES IN 2014. SECONDED BY COMMISSIONER WESTGAARD, BUT ALSO ADDS THAT PRIME RATES ARE TO BE EFFECTIVE THE FOLLOWING DATES: SEPTEMBER 1sT, 2013-FEBRUARY 18TH, 2014. MOTION PASSES 6-0. 7.2 Olympic Ice Plant/Arena Renovation Arena Manager Czech says that the ice plant was purchased in 1997 when we added the Olympic Sheet and was state of the art at the time. The Olympic has 3A"tubing in a sand floor for cooling (direct system). There should be 6500 lbs of refrigerant in the unit. Facilities are now going to indirect systems that are using ammonia. Our system uses R22 which is being phased out, which has driven the cost up to $20/1b. We have a leaky valve in our system which needs to be fixed, we will have to purchase more coolant and there are environmental concerns if it should get worse. We need to have a plan in place because of the cost involved, either we build a new facility, or undergo a renovation that includes a new plant. Repairs are being done this week, which will cost$7800 not including the additional cost to refill the refrigerant. Commissioner Westgaard notes that we will need to replace the plant in off peak times. City Administrator Cal Portner notes it is more efficient to operate 2 sheets with one plant. There are many capital outlay projects in the next 10 years. Insurance would cover a loss in revenue, and if we have to keep making small repairs, the money is wasted if we do a renovation or buy a new plant. Unfortunately there are many community assets that need money at the same time, and there isn't a lot of new development dollars to offset. Commissioner Westgaard notes that we have to start budgeting for the $2.2 million ice plant soon if there is no interest from the city council to renovate. When the renovation plan was last submitted to council the funding options were incomplete. Portner states the per forma is done, but bonding rates are not good for recreation projects, and suggests that we find other revenue sources that we can build in. 6 Commissioner Westgaard suggests having a pro shop in the building, and putting it back in front of the city council. City Administrator Cal Portner notes there has been discussion of selling the current building as well as the Senior Center and rebuilding at Lions Park. Westgaard notes that those decisions are outside the realm of the Arena Commission, and that they should tell the council that we need to have $5 million in capital outlay over the next few years, or a renovation. Arena Manager Czech states that if we are not going to have a renovation, that we move the new ice plant to the 2014 or 2015 capital outlay because of the issues. Commissioner Westgaard suggests putting the renovation back in front of the council in May if possible, and to talk to Clay Wilfahrt, the city's Economic Development Director about the cost of pro shop leasing. He inquires about the cost of renting out the dry land facility, or if we are better off taking out the ice in March or April and selling the dry floor time to the High School for Lacrosse. Czech notes that we need to be proactive so that it is understood that this is not a wish but a need for the facility. He also states that the Barn Ice Plant has fewer hours on it since it is only used for half of the year, so the Olympic ice plant should be replaced first. Westgaard suggests looking into "Mighty Duck" funding for replacing ice plants. (Commissioner Givens leaves) 8. Arena Managers Update Parks and Recreation Director Michael Hecker discusses the new field use allocations policy(which does not affect the arena) as well as a revision to our background check policy. There are three groups that will need to have background checks: Permit users(not applicable to arena), paid positions, and volunteer positions that work with children. Our current policy hasn't been updated since 2008 and only included sexual predator screening from MN. He 7 stresses that we want to be up to date with national standards. They will cost $18.50 per person and will be done every two years. Commissioner Cunningham inquires about who sets the boundaries as far as who is considered to be "working with kids". Hecker states it will be up to the individual groups to make those decisions. 9. Announcments None. 10. Date of next Arena Commission Meeting August 13, 2013- 6pm in Uppertown Conference Room. 11. Adjournment MOTION BY COMMISSIONER CUNNINGHAM AND SECONDED BY VICE CHAIR JOHNSON TO ADJOURN MEETING. MOTION PASSES 6-0 AT 8:15PM. Minutes Prepar d by Laura Tina All , City-Clerk Dale Martin, Chair 8