Questions still linger over possible school purchase of ice arena
Full school board expected to hear more on Thursday, May 3
Is support slipping for a School District 831 move to take over the ice arena operation from the Forest Lake Area Athletic Association?
Signs of support were missing when school board committees met on Thursday, April 19 to once again review a plan that would see the district buying and operating the Forest Lake Sports Center. Last Thursday’s review comes as the school board prepares for its Thursday, May 3 regular meeting when the sports center topic is expected to be an agenda item.
Talks for a possible shift in ownership and operation of the sports center started late last fall and moved to the board level earlier this year. The FLAAA four-year-old facility adjacent to the city-owned airport was built on city-owned land with bonding help from the city.
While FLAAA has no intention of closing the facility, it turned to the school district and the city to explore new ownership. When it became clear the city had no such interest, the focus shifted to the school district as a possible new owner and operator.
Such a move if achieved would enable FLAAA to continue to operate and expand its youth programs without the heavy task of managing an ice complex, said Larry Porter, the current arena manager and long-time FLAAA official.
The school board is yet to take a formal position on the sports center acquisition, but two members, Kathy Bystrom and Dan Kieger, raised questions and concerns for the district’s involvement at a March school board meeting.
Another board member, Karen Morehead, who also serves on the city’s park board, did not support the school board moving ahead with the proposal during discussion by the board’s building and grounds committee last week.
Two other board members who served on the building and grounds committee — Gail Theisen and Julie Corcoran — raised their hands in support of continuing the process of exploring a possible purchase.
Only three of the 11 voting members of the building and grounds committee supported continuation of the effort. Also not in support was Julie Ohman, director of community education, the department that previously supervised the school-owned Maroon and Gold Sports Center which was closed when the sports center was built.
It is the early plan, the arena pro forma and a feasibility study completed by Ehlers & Associates for the district that has come under scrutiny.
Under the Ehlers study, a form of lease purchase would be recommended. The pro forma completed by Ehlers indicates that the district through expanded operations and revenue creation will be able to cover operating expenses and debt service through facility revenues.
The preliminary plan would likely see the district bonding for $5.1 million over 20 years to cover the purchase. FLAAA has some $4.6 million in existing liabilities on the sports center.
Larry Martini, director of business services for the district and point man for the district on the sports center move, said last week the district should be able to sell bonds in the range of 3.7 percent. A 20-year bond would result in annual debt service payments of about $309,000 while a 30-year bond would result in annual debt service payments of about $262,000.
Martini said in an interview that the benchmark purchase price has yet to be determined and it is not a given that the FLAAA would walk away with a $500,000 profit as the pro forma seems to indicate. If the school board decides to move forward with the purchase, negotiations with FLAAA on the final price would then commence.
The Minnesota Department of Education must first grant approval of the purchase and the method of financing, should the school board decide to move forward, Martini said.
But questions and concerns continue to be raised.
The possibility of a $500,000 overage to FLAAA was questioned by Forest Lake resident Steve Goedeke who attended last week’s building and grounds committee meeting.
He also raised concerns that the purchase did not take into account long-term capital improvements the operation may need beyond debt service and general operating expenses. Goedeke also questioned how the purchase would benefit the educational offerings for the entire student population and if the school board has prioritized this purchase to other needs.
Goedeke was also critical of the sports center only making the ice-skating surface available to the general public for two hours a week during the skating season.
Porter, during an interview this week, discounted fears that the FLAAA was going to be paid handsomely in terms of profit if the district should take over the facility.
“We know that’s not going to happen,” Porter said of a $500,000 net gain to FLAAA. “That was a starting point [for negotiations].”
He said FLAAA worked long and hard to get the facility built. Local fund-raisers and grants pumped nearly $1 million into the project. Porter said FLAAA was not looking to make a killing on the deal.
“I don’t see us [FLAAA] gouging the school district,” he said. “We need to receive enough to pay it off.”
If some profit is generated from a sale, Porter said it is likely FLAAA would plow those dollars back to Fenway Athletic Park improvements that the city of Forest Lake has been unable to afford. Any school district deal would not include the Fenway field operations which FLAAA has taken on from the city park board.
Porter agreed that Goedeke was correct that open skating time was in short supply, and to FLAAA’s chagrin. But it has become a matter of income and the hard truth is that open skating hours generate little in form of revenue, he said.
“With the debt service we have, we have to sell every hour we can,” Porter said. During the hockey season, ice time sells for $195 an hour.
At the building and grounds committee meeting last week, Thiesen and Corcoran offered defense for the purchase.
Theisen said some may look at the purchase as more of an opportunity than a problem. She said the sports center has served as a “hub for people” in terms of a recreation site.
Corcoran said FLAAA “took huge steps” to get the facility running at a time when the Maroon and Gold arena was on its final legs and there was little chance a community center featuring an ice arena would be built any time soon.
Morehead was sympathetic, but not willing to throw her support behind the effort at the full board level at this time. “We don’t have a lot in this community,” Morehead said.
If the sports center was “going under” and not able to survive, Morehead said she would be “more willing” to see the district get involved now.
At the other committee meetings last week, the staff welfare and finance committees were not asked to vote or make a formal recommendation to the full school board over what to do next with the sports center. At the finance committee, Superintendent Linda Madsen reported that there was no formal vote, but one member was opposed with one member a yes and the rest of the committee leaning toward yes for proceeding.
Madsen said last week the school board has the option of delaying any decision on proceeding at this time. That would push any action to a future meeting.