Agenda Packets - 1996/06/03 - Laserfiche WebLink

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STAFF REPORT PAGE TWO The initial concept to be presented Monday evening will include the possibility of every known interest and concern expressed that I am aware of for a Bel Rae community center/volleyball facility. Cathy and I met with the architect, representatives from VB Diggs, Jim O'Meara of Briggs &Morgan, and Bob Thistle and Ron Langness from Springsted this past Tuesday to review options and determine how best to present this to Council. The principle concern I feel needs to be arrived at is what will be the acceptable cost to the Council and community for a project for the activities and needs the building will house. In starting toward this end some assumptions had to be made. First, in earlier meetings with the architect, staff reviewed various building arrangements and the potential estimated construction costs that housed the activities commonly understood to be in the building. Added emphasis was placed on accommodating activities that could be assured of generating some revenues for the project. I generally saw these potential revenues as falling into three categories of sustainability. First, if the project could generate property taxes to be captured as a tax increment, this would be a very reliable source of revenue. However, this is predicated on two concerns, one, that VB Diggs would own and operate their business portion of the project, and two,that the increment is sufficient enough to make a difference in the cash flow operations of the project. The second category of revenues is for lease arrangements that could be made for a predictable and reliable period of time. Only one appears to be possible and it is with Community Education. The advantage is twofold for Community Ed will be reliable, albeit for a few years, and they will provide services that everyone wants in the community. They will be a good tenant. The third group is all the other activities that will generate revenues but cannot be quantified yet, such as wedding receptions, recreation programs and so forth. It still may be possible to make some sort of educated guess as to these, but for the time being, I would suggest considering these revenues later and be placed against any amount determined to be needed to close the gap between known revenues and predicted expenses. With these concerns in mind, one of the design concepts drawn up by the architect was considered by staff to be preferable and most workable in further developing the concept. This concept held that the Bel Rae and a volleyball facility would be attached in order to jointly utilize common space and functions, but also because sections of the concept could be eliminated or changed fairly easily. The other two options were one,to have the buildings separate, and two, to not have the volley ball facility at all. Those certainly can be considered again if the Council wishes, but for now, staff requested further work be done on the common building. At the meeting this past Tuesday, the architect refined the concept and the financing options were discussed. Essentially three approaches could be taken. First, the City could own the entire facility and lease space to the other groups and VB Diggs. The merits of this were discussed. The main problem would be the City's inability to secure long term lease guarantees and this appeared to place undue risk upon the City. The second option was for VB Diggs to finance the entire facility and lease back to the City. The likely problem here was that VB Diggs probably would not be able to acquire private financing for such an arrangement and it was agreed that the City financing VB Diggs at this level was again an undue risk to the City.