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3.0. SR 10-28-1996'ty of iver FROM: DATE: SUBJECT: MEMORANDUM Mayor & City Council Pat Klaers, City Adm~h~ator October 28, 1996 MSF Proposal As reviewed by the City Council at its October 21, 1996, meeting, the Minnesota Sports Federation (MSF) needs to enter into a Letter of Intent with the city. This Letter of Intent will outline the MSF building site and field usage plans so that it can embark on its fundraising campaign. MSF representatives Perry Coonce, Barb Northway, and A1 Mundt, along with Pat Pelstring from Public Resource Group, Inc., have been invited to this worksession. City Bond Consultant Dave MacGillivray from Springsted and Assistant City Administrator Lori Johnson will be in attendance to discuss financial issues with the City Council. Dana Anderson and Dave Anderson (plus possibly Phil Hals and Jeff Asfahl) will be in attendance to discuss field usage, scheduling and possible conflicts, and city recreational use of the MSF building. Attached for your review are two items provided by MSF. These items were requested at the last Council meeting. Attached is a handout titled "How does the average Elk River citizen benefit from the MSF sports complex in Elk River". The second handout relates to dates, times, and prices for when the MSF sports complex will be available for city recreation programming. The Letter of Intent between MSF and the city is general and does not contain an extensive amount of detail regarding the future commitments of the city or MSF. The details of the proposal will evolve and have to be worked out between both parties in the next six months or so. Nonetheless, the Letter of Intent is an agreement that states that if MSF completes certain requirements (mostly financially related) then the city will provide land for the building, financing for the project, and access to fields. As previously discussed by the City Council, if the city does not finance the project through a lease/purchase arrangement, then there will be no MSF building project. A great deal of additional data needs to be evaluated before the city can commit to funding this project, but this doesn't seem likely to be completed before a Letter of Intent is agreed upon. With this Letter of 13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425 Intent, the city will need to make it very clear that if the financial pro forma is not to our satisfaction, then the city will not move forward with the financing of the project regardless of previous agreements regarding sites and secured capital by MSF. One of the major issues with this MSF project is financing. MSF must first raise a significant amount of capital before the project can move forward. As previously noted, this is one of the main reasons that a Letter of Intent is needed. Additionally, the city needs more data on the finances of MSF before it can be comfortable in recommending support for the city financing this project. This data includes additional information on the revenues projected for the fitness center along with data on the finances of the existing MSF operations. In this regard, the city needs to see if additional funds are available if the building revenue and expenditure projections are not correct. On October 28 1 think that you will hear some conversation about the 10 percent minimum MSF contribution to the bond issue, plus the possibility of MSF establishing a separate emergency/debt retirement fund in case the project estimates are not realized and additional funds are needed. Another significant issue with this proposal is the land for the building and for the fields. Staff believes, without seeing any plans to review, that the sports complex can be accomplished on five to six acres. The city is very interested in seeing the proposed plans for this facility and the long range master plan for activities around the sports complex. The city needs to know under what conditions MSF will want additional land around their sports complex. This situation relates to the additional two acres south of the apartment complex. Everyone at the city level is being very protective of this additional two acres. The city Park and Recreation Commission and staff members see this additional two acres south of the apartment complex as being very important to the long term development of Orono Park. Also regarding the building, at the last meeting we saw two cost estimates for the project. There is a very strong desire that this facility be of the "tip up panel" variety and not a metal building. This facility should meet our building park design standards and must be a building of high quality if the city is going to provide this level of assistance. Regarding field usage, it is believed that MSF, the existing softball complex facilities, and the youth sports activities on the Cass fields can all co-exist. There are no plans at the city level to allow MSF to use the existing softball complex. The Cass fields should be available in 1998 and it is planned that these fields would be available approximately two weekends per month for MSF usage for tournaments. Use of these fields by MSF for two weekends each month will not conflict with the needs of the youth sports organizations. Dave Anderson has indicated to me that he believes that there will be very few conflicts with the tournaments that he organizes and runs (through MSF) and with MSF running their own tournaments on the Cass fields. Dave has indicated that he believes that he will still be able to accomplish the fundraising work that goes on at the concession stands for the youth groups that he helps support. Finally, after fifteen years or so, when the WWTP department is through using the southern part of the Cass land for sludge purposes, then we see no conflicts or problems with entering into a long term lease to allow MSF to develop this land into fields. MSF would be responsible for developing this 23+ acreage for their use and it is expected that the city will be allowed to use those fields free of charge during the week for youth activities when they are not needed for MSF activities. A final issue that has been briefly discussed relates to the strength of the MSF organization. Right now, the organization has strong leadership, but even so, is not a "bankable" organization. It is assumed that Perry, Barb, and A1 are going to be long term employees of this organization, but it must be acknowledged that anything could happen that would change their status at MSF. What happens to MSF under a worse case scenario is uncertain at best. Regarding the proposed Letter of Intent, our city attorney will be in attendance to discuss what is actually committed by the city for entering into this type of proposal. Again, the Letter of Intent lays out the framework for a future development agreement between the city and MSF. I do know that the 8.5 acre reference under project description and city responsibility point #2 needs to be reconsidered and also the field usage narrative under city responsibilities (#3.a) needs further clarification. With certain modifications and additions to the Letter of Intent, I believe that it is worth pursuing as long as everyone understands the future obligations of both parties. sys\shrdoc\council\msfloi.doc 1. They receive a first class amateur-recreational sports facility at no cost to taxpayers. 2. Elk River and area residents receive pdodty registration for all MSF leagues and events held at the sports complex. 3. Court rates for gym usage will be at a 25% reduction to local community/citizens for local events. 4. MSF management of sports complex ensures quality programming and mix of events. 5. Elk River youth/adults and senior citizens will have available the use of gym (as open gym) when MSF leagues and tournaments are not scheduled. Elk River citizen rates will be as noted in #3 above. 6. A walking/running track is planned with daily usage fee and/or a monthly usage fee. 7. Two batting cages are planned, adjustable for slowpitch/faspitch softball and also baseball. 8. A multi purpose room available for rental for meetings, camps, clinics, parties etc. 9. A fitness/training center for use by local residents with Iow monthly rates and reduced rates for Elk River residents. 10. A youth lounge/viewing area with adjacent kitchen and video game room. 11. Adult lounge/viewing area with adjacent kitchen. 12. A planned aerobics training area. 13. Youth camps & clinics in Junior Olympic Softball, NYBA Basketball and Boys Baseball. 14. In season leagues in basketball, volleyball indoor soccer and indoor touch football for youth and adults. 15. On site lockers/shower facility for use while at MSF sports complex participating in leagues, tournaments, working out or at a camp or clinic. 16. As other amateur recreational events are planned they will also be open to Elk River residents. 17. On site child care center limited for members of fitness center while participating in aerobics/fitness activities. 18. Daytime senior citizen exercise/social programs. All night lock ins for youth during non-school days. 20. Full and part time jobs of sports complex staff. 21. Opportunities for fund raisers for local groups and associations. MINNESOTA SPORTS FEDERATION Barrington Center · 592 Dodge Avenue ° Elk River, Minnesota (612) 241-1789o Fax (61.2) 241-1736 55330-2886 October 21, 1996 Dear Pat Klaers The MSF will make available to the City of Elk River programming hours at the Minnesota Amateur Sports Center at 25% below the going per court rate of approximately $35.00 - $40.00* per court hour. The anticipated program court hours available to the City of Elk River are as follows: 1. 9am - 3pm 2-3 days per weekday 2. 3pm - 6pm 2-3 days per weekday 3. Approximately 10-12 weekends per year NOTE: Please bear in mind that nearly 100% of MSF weekday programs are open to Elk River residents as well as weekend events. ~ fitness center, walking/running track, youth lounge & game room, multi-purpose room and adult ~ounge will be available to Elk River residents all hours the sports complex is open. The only exception would be at large state/national tournaments that would require their closure during tournament hours. Based on the total programmable hours at the Sports Center, 30% will be made directly available to the city at approximately $30.00 per court hour. The City of Elk River and the geographic area they specify, will be given priority registration for the above programmable hours and all MSF weekday programs. 'q'his is the amount of revenue needed by the MSF to cover the Sports Center operating costs and mortgage payments. Sincerely, Al Mundt cc: Perry Coonce SERVING MINNESOTA THROUGH SPORTS~ The Minnesota Sports Federation serves os the k:~c. al ossoctotion of the Arnoteur Softbolt Assoc~n of America and odrnlnlste~ the Notional Youl'n BoskeYool1,4..~4:~lotton and Notionol Sports Federallon l:~ogrorns, The Amateur Softball Assoctatfon ts recogn~zecl os the Nolfonal Governing BoOy for Softball.