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HomeMy WebLinkAbout05/14/1990 Council Minutes (2)86 COUNCIL WORK SESSION INSIDE SPORT PROPOSAL MAY 14, 1990 Mayor Bisel called a work session of the Lino Lakes City Council to order at 5:35 F.M., Monday, May 14, 1990. Council Members present: Neal, Kuether, Reinert, Bohjanen. Council Members absent: none. City Planner, John Miller; Fiscal Consultant, Ron Batty; City Administrator, Randy Schumacher and Clerk - Treasurer, Marilyn Anderson were also present. The purpose of the meeting was to review options presented by the Inside Sports for financial assistance from the City of Lino Lakes. Mr. Schumacher asked Mr. Batty to present the two (2) proposals and requested direction for the Staff from the City Council. Mr. Batty explained that several proposals for financial assistance have been received from Inside Sports. Some options are not "doable" for one reason or another. The most recent proposal involves using gross revenue bonds. This is an acceptable option but does involve some obligation on the part of this City. Mr. Batty explained how this type of financing would involve the City and explained that if Inside Sports were unable to meet their financial commitment, there would be the need to levy ad valorem taxes on the entire City to cover the City's obligation. A second option was outlined by Mr. Batty. This option involves the installment and lease purchase options that was allowed by State legislation and is now being cancelled by the State. This option is only available until July 1, 1990. The City would purchase the property under an installment agreement and then lease the property to Inside Sports for something less than the purchase price. (This would be a subsidy to Inside Sports) Inside Sports would then build the facility. The Council discussed why the City should be involved in the financing of Inside Sports. It was noted that the developers of this facility have approached several other cities with the same proposals and no other city has expressed interest. The developer has noted that this facility would attract other commercial ventures to this City and would expand the employment base in the City. The Council asked why the developers do not obtain bank financing. Mr. Batty explained that the facility is unique and if the developer was unable to meet his commitment, there would probably be no other use for the facility. This makes banks nervous. - Several questions were raised. Is this a valuable enough development and does the City want it here? Also, if the City does not offer assistance, will the developer go to another city? Mr. Batty noted that the developer did make a presentation to the Economic Development Committee and would like to make the same presentation to the Council. 1 1 COUNCIL WORK SESSION INSIDE SPORT PROPOSAL MAY 14, 1990 Mr. Batty explained to the Council that there are no "no- risk" financial options available to the Council. The Council is facing a policy question in this matter. Council Member Reinert asked if the developer wants the City to take a risk in the event. that the facility cannot meet its obligations, is the developer willing to share profits with the City. Mayor Bisel explained that the developer felt the trade -off would be that the City gains by the increase of commercial taxable property which increases the tax base in the City. Mr. Batty noted that the developer is hoping that this facility will be the start of other entertainment /recreation facilities in the area. Council Member Bohjanen asked if Inside Sports has any track record. Mr. Batty said no and noted that other domed sports facilities are not quite like what is planned for Lino Lakes. Council Member Bohjanen asked if another such facility is planned for the City of Blaine. Mr. Batty said no. He noted that the prime market for this facility will be leagues that already exist and are willing to drive long distances to the facility. Mayor Bisel told the Council that the Minnesota Sport Federation has agreed to run this new facility and to locate their offices in the facility. This would be a good base. Council Member Reinert asked Mr. Batty is he has translated the risk into dollar figures. Mr. Batty said no. Mr. Batty noted that there is a risk and said he did not know if the risk was worth taking. Mr. Batty told the Council that the developer expect to radse $2,000,000.00 in sixty (60) days for the facility. They are looking for City assistance because they are unable to get bank financing at a rate they find acceptable. Several other questions were asked. If the developer files Chapter 13, who retains ownership of the facility. Mr. Batty said that would depend on what type of financial assistance is offered by the City. Mayor Bisel asked how would the City get its money back if the City did not own a portion of the property. Mr. Batty said the City may not recover the money. Council Member Reinert said he felt that if the City v. going to take the risk it should be rewarded. Mr. Bat said the reward would be in the form of "spin -off" develop t. Council Member Reinert asked if the developers have b thoroughly checked. Mr. Batty said no hov,PuA -- . there a firm that will do this for a fee. This has not been • because the staff is not sure what the Council would done. Council Member Reinert said he would also like analysis of the impact of this facility on police, fi Ind PAGE 2 87 88 COUNCIL WORK SESSION MAY 14, 1990 INSIDE SPORT PROPOSAL public works facilities. Mr. Schumacher explained that there is a problem with the structure in that it does not meet state fire codes or building codes. The Council asked staff to determine who are the people involved with Inside Sports. The Council also asked Staff to determine how solvent the developers are. A work plan, a market plan and a business plan was also requested as well as other personal information. This information will be presented to the Council at a later date. The Council thanked Mr. Batty for coming before the Council. The Work Session adjourned at 6:48 P.M. These minutes were considered, corrected and approved at the regular Council meeting held on May 29, 1990. 6-1146A- Marily G. Anderson, Harold L. Bis_ , Clerk - Treasurer PAGE 3 Mayor 1