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City fees nearly melt FLAAA plan |
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Wednesday, 27 February 2008 |
Cliff Buchan
News Editor
Plans for a new sports complex in Forest Lake will move forward, but only after the volunteer group that is developing the facility agreed to pay development fees over 20 years.
Three votes by Forest Lake City Council on Monday cleared the way for the Forest Lake Area Athletic Association to move forward with construction this spring on the Forest Lake Sports Complex. The facility will be built on 6.6 acres of land in the Headwaters Development that the city will lease to the FLAAA.
The council, after some 90 minutes of deliberation, voted unanimously to approve the FLAAA ground lease and a memorandum of understanding tied to the lease. The council also voted to waive half of the building permit fees normally charged by the city.
But the council, based on staff recommendations, would not budge on requiring the FLAAA to pay some $135,000 in development charges and connection fees related to sanitary sewer and water area charges to cover infrastructure improvements.
It was nearly a deal-breaker and the insistence on the payments came as a surprise to FLAAA’s executive committee.
Larry Schminski, a member of the FLAAA executive board, said the requirement was a surprise. Had FLAAA been aware of the requirement, a different site could have been considered, he said.
Schminski argued that the city won’t charge assessments for sewer and water to the city-owned athletic fields because it is part of the city’s long range community center. The sports complex is also part of that concept, he said.
“It’s part of the project,” he said.
Councilwoman Susan Young was the vocal leader of the city’s point of view on Monday, insisting that all developers must pay infrastructure and area charges to protect the investment and cost to all stakeholders in the city.
“This is your share,” Young said to the FLAAA.
“These are developer fees,” added City Administrator Chip Robinson, who added it was his understanding the assessments would be charged.
The impact
Much of Monday’s discussion centered on the level of the city’s contribution and what fees the city could waive.
Robinson said the willingness to lease the 6.6 acres over a 35-year-period has a sale value of $500,000.
Additionally, when the market valuation of the sports complex is factored, it would mean an annual property tax levy of some $23,000. Because the FLAAA is a non-profit organization, it would not be required to pay property taxes.
Robinson said the council must weigh the benefits of the sports complex to the community in determining what fees and charges it could waive. “I can’t make that decision for you,” Robinson said.
Councilman Greg Ochs questioned the city’s desire to assess a non-profit group for a project that will benefit the entire area. “The city is going to benefit greatly,” Ochs said.
The argument involved direct and indirect benefits to the community.
“These dollars don’t come back to Forest Lake,” Young argued, saying the city gains little in terms of revenue, but places more burden on all taxpayers by waiving fees. She agreed that area businesses would likely benefit in form of increased business activity generated by the complex.
FLAAA’s appeal
A compromise was reached Monday after the FLAAA made it clear that if some agreement could not be reached this week the project would likely be delayed another year.
“This is a bit of a curve ball,” Schminski said, speaking of the area assessments. The dollars for the fees are not in the FLAAA budget and would be a hardship, he said.
If the project is not able to break ground this spring, a late fall opening would not be possible, he said. “We need some kind of resolution tonight,” Schminski said.
“We’ve come so far in the past 18 months,” he said, pointing to the success of a fund drive that has netted $900,000 to date. A final push is still needed to reach the $1.2 million goal.
Larry Porter, another executive board member, reminded the council that the FLAAA has contributed $150,000 to the city and former township for athletic field development and spent another $25,000 on maintenance on existing city-owned fields.
Although an agreement on a concession stand operation to serve the Headwaters athletic field complex is pending, Porter said FLAAA is near agreement on a plan to construct, operate and share profits raised by the facility.
“I don’t know that we are asking for the world,” Porter said.
Porter’s points did not impress the mayor. “You paid for improvements to fields you use,” Mayor Stev Stegner said.
But it was Young who shaped the compromise that the FLAAA was willing to accept. Although she remained firm on the payment of area charges, Young offered that the fees be paid with a no-interest loan spread over 20 years.
FLAAA agreed with the understanding that the first-year payment would not be required until one year after the facility is operational.
Under the agreement, the sports complex would be required to pay some $135,000 in area charges, including sewer ($20,000), water ($30,000) and transportation ($29,600) over the 20-year period. The $135,000 also includes a water connection charge of $23,634 and a sewer connection charge of $31,200.
FLAAA must pay up front a $47,450 charge to the Metro Council Environmental Services and post a $200,000 letter of credit with the city.
The city also agrees to waive half of the estimated $56,000 in building permit and plan review fees.
The ground lease
The ground lease, which was back for its second council table review, was approved after a host of language amendments were tacked on by council members and Mayor Stegner.
The 35-year lease, granted by the city for $1, paves the way for the city to act as a conduit for the issuance of no-obligation industrial revenue bonds in the amount of $4.5 million, following a plan approved by the council when FLAAA launched its plan to build a sports complex.
The bonds have no city liability and are supported by revenues generated by the multi-sport complex that will feature two ice sheets and a five-month skating season.
Young, who led the discussion with numerous language changes to the lease agreement, said her intent was to raise awareness of the “risks” the city could face over a 35-year lease period. Be mindful of the risks, she warned.
“At the end of 35 years, there is a thing out there,” she said of the sports complex building. “It may be in really, really great shape.”
City Attorney Dave Hebert, who worked with FLAAA representatives on the lease agreement, assured the council that procedures are in place to protect the investment and that banks involved in the project would protect their investment.
Under the agreement, the city will receive quarterly financial reports on the sports complex operation and has the option of appointing a council member as a non-voting member of the FLAAA board.
In opening the discussion on Monday, Laurie Kumerow, an executive board member, said FLAAA has made design changes in the building to meet height requirements tied to the nearby airport. She added the efforts remain firm to design the facility for multi-sport use throughout the year. An inside walking track is also being studied, she said.
“We really want to make this a community facility,” Kumerow said.
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