Public hearing scheduled for May 30
The school district is one step closer to buying the Forest Lake Area Athletic Association Sports Center.
With one dissenting vote, the school board on May 2 voted to start the process of purchasing the home of Lichtscheidl Arena from FLAAA.
The district would pay $3.3 million, below the appraised market value of $5 million, for the building and contents.
At that price the district expects the arena to create a profit beginning in the first year, adding $100,000 a year to the general fund.
The district has been leasing facilities for athletic programs but would now lease to other groups.
The school district’s purchase would be funded using abatement bonds paid over 15 years, with debt service for the bonds added to the property tax levy.
The interest rate, according to Business Manager Larry Martini, would be 1.8 percent. The annual cost for the owner of a $200,000 home would be about $13.
No referendum is required, but a public hearing will be held at 6 p.m. on May 30 at the district office, 6100 N. 210th St.
The athletic association would be out of the business of running the arena. The volunteer organization’s one employee, Larry Porter, said there are mixed emotions, but he thinks it’s a good deal.
A few years ago, when the school district needed $40,000 to keep the old Maroon and Gold Arena open for one more year, FLAAA provided the funds even though hockey was not part of the organization at that time, he said.
And when the community needed a new arena, it was FLAAA who took on the responsibility. The building opened in December of 2008.
Every spring and early summer, a time with less call for ice, Porter said FLAAA had to draw down reserves to make the debt payment. Not wanting to continue with that struggle, “we went to the banks. They wanted to get out, too.”
Four banks—Village, Frandsen, Mainstreet (now Central) and Patriot (now First Resources)—are nearly equal owners of the outstanding debt of $4.6 million. They all agreed to take a loss on the debt. (Two of the original four banks failed and have been taken over by new owners.)
At the FLAAA meeting on May 1 (the day before the school board meeting), the 16 members of the FLAAA board all voted in favor of selling the arena to the school district.
Superintendent Linda Madsen and Business Manager Larry Martini recommended approval of the purchase, and school board members also expressed support.
Dan Keiger, who made the motion to initiate the process, said, “I want to make sure this is something this community can enjoy for decades.”
Karen Morehead said the space would benefit the entire community, as it is used for much more than hockey, including other sports and even an Easter egg hunt during the cold weather this spring.
Erin Turner called the purchase a positive addition both budget-wise and opportunity-wise.
Gail Theissen pointed out that the school district and FLAAA have always had a good relationship and said, “It’s gotten to the point where it’s just meant to be.”
Julie Corcoran said it’s more than just an arena: It’s “the only thing we as a community have come together and done for many years.”
Board president Rob Raphael said the school district took a very thoughtful, conservative approach, including hiring an audit to get cash flow projections. “$3.3 million is a real win for this district,” he said.
Raphael said extra-curricular activities teach kids discipline and help them find a place in the community, and “when we can do it in a way that helps our bottom line, to me that’s a win-win.”
The lone opponent, Kathy Bystrom, said “from a business perspective this picture is much brighter, but the question for me is, should the district be in the arena business? No matter how much I try to come to that conclusion, I can’t. It’s a want, not a need.” Bystrom said the district should “remain laser-focused on our facilities plan.”
Bystrom said the arena should be owned by the city of Forest Lake, but Morehead argued that school district ownership is better for the communities surrounding Forest Lake.
The closing date specified in the purchase agreement is June 30. Porter said the banks are hoping the entire deal will be done by the end of their second quarter.
Before closing, the school district must conduct abatement bond hearings, get approval from the Minnesota Department of Education, and conduct a due diligence study to make sure the facility is in good condition.
In addition, the city of Forest Lake must consent to the assignment of the current ground lease from FLAAA to the school district.
Also required is a new agreement between the city and the school district for blacktopping the east-side parking lot, which FLAAA was not able to complete.
After 10 years of working on the arena project, what will happen to Porter? “I’ve been trying to retire for more than a year,” he said.
Porter plans to stay on as gambling manager and run the pull-tab operation until the end of the year, while training his replacement.