10-28-1996 CC MIN - SPECIALSPECIAL MEETING OF THE ELK RIVER CITY COUNCIL
HELD AT THE ELK RIVER CITY HALL
MONDAY, OCTOBER 28, 1996
Members Present:
Mayor Duitsman, Councilmembers Dietz, Scheel, Farber, and
Holmgren
Members Absent: None
Staff Present:
Pat Klaers, City Administrator; Sandra Thackeray, City Clerk; Lori
Johnson, Assistant City Administrator; Dave Sellergren, City
Attorney; Phil Hals, Street/Park Superintendent
Aisc Present:
Dave MacGillivray, Bond Consultant; Dave Anderson, Park and
Recreation Commission Representative; Dana Anderson, Park and
Recreation Representative; Jeff Asfahl, Community Recreation
Director; Pat Pelstring, Public Resource Group; MSF Representatives
Perry Coonce, Barb Northway, and Al Mundt
1. Call Meetinq To Order
Pursuant to due call and notice thereof, the special meeting of the Elk River City
Council was called to order at 5 p.m. by Mayor Duitsman.
2. Consider Council A.qenda
COUNCILMEMBER HOLMGREN MOVED TO APPROVE THE 10/28/96 AGENDA.
COUNCILMEMBER DIETZ SECONDED THE MOTION. THE MOTION CARRIED 5-0.
3. Discuss MSF Proposal and Letter of Intent
City Administrator Pat Klaers indicated that the City Council held a worksession on
October 17 to begin formal discussions between the Minnesota Sports Federation
(MSF) and the City of Elk River for the construction of a sports facility in Elk River on
property which would be donated by the City. The City Administrator indicated
that the purpose of this meeting is to continue discussions regarding the proposed
MSF sports complex. The City Administrator stated that this meeting would center
on certain issues that need to be clarified prior to entering into a Letter of Intent
with the MSF.
Assistant City Administrator Lori Johnson indicated that staff has been working
with City Bond Consultant Dave Macgillivray of Springsted to review the financial
aspects of the proposal. She indicated that the City has some concerns
regarding the exposure that this type of project would have on the City.
Dave MacGillivray of Springsted indicated that the City does have statutory
authority to finance this type of transaction. He recommended that the City
finance the project through gross revenue bonds. Dave MacGillivray indicated
that by financing through gross revenue bonds, the City must pledge that it will
operate the facility for the life of the bond issue which is approximately 20 years.
Dave MacGillivray discussed the components of the pro-forma for the MSF sports
Special City Council Meeting
October 28, 1996
Page 2
complex. He indicated that according to the pro-forma the principle revenues of
financing the MSF sports complex include the following: 27 percent from
volleyball; 27 percent from vending machines and other associated sales; 30
percent from the operation of the fitness center; and 13 percent from rentals and
advertising. Dave MacGillivray indicated his concern regarding 30 percent of the
revenues coming from the operation of the fitness center. He stated that the
Council should also be concerned about other competing fitness facilities
whether they be private or public. He stated that should another large fitness
center be built in the City of Elk River, the City must question whether this would
jeopardize the revenues of the MSF sports complex. He indicated that the City
must also bear in mind that should a fitness center be included in a community
center, it could be perceived as being in conflict with the MSF facility. Dave
MacGillivray next discussed the marketability of the project. He indicated that he
felt it would be possible to find a bond purchaser for the gross revenue bonds
through direct negotiations.
City Attorney Dave Sellergren indicated that from a legal perspective the Letter
of Intent is not binding to the City and the City would not be taking a risk to stad
the process, other than costs associated with the review and evaluation process.
Dave Anderson, Park and Recreation Commission representative, discussed the
effect the MSF would have on organizations that are currently managing the
vending operations during softball games. Perry Coonce indicated that during
the first phase of the MSF project, it would continue to have the existing youth
organizations operating the concessions.
Dana Anderson, Park and Recreation Commission representative, indicated his
concern as to what type of guarantee the City would receive regarding indoor
use of the sports complex for the local youth. Al Mundt indicated that City
residents would be charged less for use of the facility than non-residents.
Discussion was held regarding cost to rent the volleyball courts. Discussion was
also held regarding a possible conflict of interest if the City builds a community
center and includes a fitness center within the community center. Al Mundt
indicated that MSF has changed its per-forma to indicate that 12 percent of the
funding would come from the fitness center rather than 30 percent.
Street/Park Superintendent Phil Hals indicated that he has some concerns
regarding the acreage and space allowed for the sports facility, parking, and
fields. He stated that Orono Park is the City's premier park. He indicated that
usage of the park has increased and suggested that the Council closely consider
whether or not it should give up the 2 acres that are adjacent to Gary Street for
the MSF complex. Phil Hals indicated that these two acres could someday be
incorporated into Orono Park.
COUNCILMEMBER DIETZ MOVED TO AUTHORIZE STAFF, CITY AI'rORNEY, AND BOND
CONSULTANT TO MOVE FORWARD IN DRAFTING A LETTER OF INTENT WHICH WILL BE
BROUGHT BACK TO THE CITY COUNCIL FOR DISCUSSION. COUNCILMEMBER
HOLMGREN SECONDED THE MOTION. THE MOTION CARRIED 5-0.
4. Adjournment
Special City Council Meeting
October 28, 1996
Page 3
There being no further business, COUNClLMEMBER HOLMGREN MOVED TO
ADJOURN THE MEETING. COUNCIl.MEMBER DIETZ SECONDED THE MOTION. THE
MOTION CARRIED 5-0.
The special meeting of the Elk River City Council was adjourned at 6:06 p.m.
Respectfully submitted,
Sandra Thackeray
City Clerk
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