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Arena plans raise more questions
Published 12:00pm Wednesday, May 27, 2009The Fergus Falls City Council spent much of a Tuesday work session weighing the benefits of new projects against the uncertainties of the city’s budget.
The uncertainty comes as Fergus Falls leaders await cuts by Gov. Tim Pawlenty to state aid payments to cities. The governor has said he will consider reducing those payments as part of an effort to close a $2.7 billion budget gap by July 1.
Tuesday’s meeting began with a focus on financing a new community ice arena, but evolved into a debate over what the city can afford — including the long-term costs of doing nothing.
In addition to the estimated $7 million arena, council members have identified a $3 million law enforcement center and a $5.5 million library expansion project as potential capital improvements through 2012.
Mayor Hal Leland said he believes the release of the governor’s revised budget will be crucial to further decision-making. Fergus Falls already stands to lose $857,000 in local government aid (LGA) over the next two years under Pawlenty’s original budget. City staff are budgeting with that number in mind, but are anticipating further cuts.
“We can’t do anything until we know what our unallotment is going to be and how hard we’re going to get hammered,” Leland said.
The mayor also asked the council to distinguish between expenses that are essential to the operation of the city and “special projects” like library expansion and a new arena.
But to Greg Stumbo, First Ward, so-called special projects are important in improving residents’ quality of life. Library programs are assets that are harder to measure than repairs to infrastructure, he said, but they’re still valuable.
Eric Shelstad, First Ward, acknowledged the inherent risk in any decision the council makes on the projects, whether the decision-making happens this year or in the next several years. There’s risk associated with undertaking a project, as well passing on it, Shelstad said.
“Whatever decision we make is going to be made with a lot of unknowns,” he said.
In regards to a new arena, one major question has been how much donors could contribute to the project. Speaking on behalf of the Fergus Falls Hockey Association and the Fergus Falls Figure Skating Club, Chuck MacFarlane told council members he believed it would be difficult for arena backers to raise more than $1.5 million for the $7 million project.
Now is a difficult time to organize a capital campaign, MacFarlane said, not only in light of the economy, but because residents have already contributed significant amounts of money to projects like the Lake Region Healthcare Cancer Care and Research Center and the Lakeland Hospice and Homecare Hospice House.
MacFarlane also reminded the council that in most communities, the city funds an arena as it would pools, parks and other amenities. Local governments own 77 percent of the 116 arenas in outstate Minnesota, he said.
According to projections by the city’s finance department, undertaking all three projects would raise the city’s general tax capacity rate from about 43 percent in 2008 to 81 percent in 2020.
Or in other words, the owner of a $100,000 home would face an increase in city taxes from $429 to $997 over 12 years. That’s factoring in $2 million in contributions from arena supporters and $3 million in library grants and fundraising.
Jim Fish, Second Ward, asked fellow council members to consider the impact on residents age 65 and over who are living on fixed incomes. The council must also anticipate operational costs once projects are completed, Fish said, citing Alexandria’s current struggle to keep its arena up and running.
Some council members questioned whether the cost of the arena could be reduced. According to City Engineer Dan Edwards, the city could always go back to arena architects with a request to downsize the project. But, he said, there’s an inevitable bottom line if the city wants to ensure a new arena is worth the effort.
The two-rink arena would replace the two southerly wings of the current high school, which will be vacant by next summer. The arena’s second floor would connect to meeting rooms, storage space and offices on the school’s main level.
A new law enforcement center, tentatively planned for Eisenhower Elementary, has already been reduced from $5 million to $3 million. That project would include the remodeling of only some of the school, said Chief of Public Safety Tim Brennan.
Council members made no decisions on any of the projects Tuesday, though a decision on the arena is needed by late summer if the city is to begin construction once students are out of the high school. Another work session is scheduled for June 4 at 7 a.m. in City Hall council chambers.
