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HomeMy WebLinkAboutCity Council Minutes 01-03-1996 SpecialMINUTES SPECIAL COUNCIL MEETING JANUARY 3, 1996 A special meeting of the Plymouth City Council was called to order by Mayor Tierney at 7:00 p.m. in the Public Safety Training Room, 3400 Plymouth Blvd., on January 3, 1996. COUNCIL PRESENT: Mayor Tierney, Councilmembers Wold and Anderson. Councilmembers-elect Black and Preus. ABSENT: Councilmembers Granath and Lymangood. PARK AND RECREATION ADVISORY COMMISSION PRESENT: Commissioners Johnson, Bildsoe, Priebe, Fiemann, Wahl, and Willegalle. STAFF PRESENT: City Manager Johnson, Assistant Manager Lueckert, Public Works Director Moore, Finance Director Hahn, Park Director Blank, Recreation Supt. Bisek, Public Safety Director Gerdes, and City Clerk Ahrens. Mayor Tierney stated the purpose of this joint meeting with the Park and Recreation Advisory Commission is to discuss public-private partnerships for providing recreational facilities for Plymouth residents and public information efforts for the February 6 referendum. Manager Johnson provided an update on the letter of intent and contract development with Life Time Fitness. He said that during 1995, the Youth Sports Facilities Task Force met a number of times and identified sport facility needs of the community. The need for ice facilities and swimming pools were at the top of the list. Also, over the last two years, the City has held discussions with several private fitness organizations about locating in Plymouth. The Sports Facilities Task Force directed that staff send a letter to various fitness facilities proposing a possible joint project. There were three responses to this letter. The Flagship Fitness Club was interested in developing a club in Plymouth; however, they could not provide a reasonable public access daily fee to residents. Northwest Swim and Fitness is currently working on a project with the City of Maple Grove, whereby citizens of Maple Grove would have access to the pool area, but not the rest of the club. Manager Johnson stated that discussions with Life Time Fitness have been successful to date. The letter of intent proposes that if the City constructs an ice facility, Life Time Fitness would construct a fitness club on the same site. They have asked that the City assist in developing the site work for the project and that the City contribute $1.5 million for development of two additional pools -- a large indoor leisure pool and an outdoor leisure pool. He stated that School District 284 has also indicated an interest in becoming Special Council Meeting January 3, 1995 Page 2 a partner in this project by contributing money toward the pool. If this contribution is made, an eight -lane competition pool, diving well, and spectator seating would be added. Commissioner Priebe asked if the School District's participation is assured. Park Director Blank stated that the District is about two weeks away from a decision on whether to participate as a partner in the project. The outcome of the bid package for part of the new high school project will impact whether they will have available funds to contribute to the project. Manager Johnson stated that if the school contributes $1.5 million, their swim teams would be able to practice and hold competitive events at the pool facilities. Commissioner Priebe asked how much Life Time Fitness is contributing to the project. Manager Johnson stated that Life Time Fitness would be providing about $5 million, and an additional $1,250,000 in fitness equipment. Mayor Tierney asked if there was any commitment by School District 284 to designate money for pool facilities from their bond referendum proceeds. Manager Johnson responded that information on pool facilities was included in their bond referendum literature. He believes that the District feels obligated to contribute money toward a pool, unless the total bids for the new high school are excessive and money is needed for academic purposes. Councilmember Anderson expressed concern about whether money will be available for pool facilities, based on the previous bids received for the high school. Manager Johnson stated that some optional items are included in those bids. Park Director Blank added that the first three bid packages came in under estimate, and there is a contingency budget. Commissioner Priebe asked if this type of project has been done elsewhere. Manager Johnson responded that there have been many public/private partnerships, but staff is not aware of any of this exact nature. Commissioner Fiemann asked about the total estimated project cost. Manager Johnson stated that the total cost of the project, as currently proposed, would be in the range of $12 million. He believes that if the City were doing the entire project alone, the cost could be as much as $15 million. Manager Johnson stated that the cost of the Shoreview Community Center was about $100 per square foot. Based on that cost, this would be about a $15 million facility. If doing the project alone, the City would have to custom -design the facility and pay greater design costs. The City would also have to follow more costly bidding and project bond requirements. Life Time Fitness negotiates their contracts which saves project cost. Commissioner Wahl stated that this proposal was discussed by the Park and Recreation Advisory Commission at their last meeting. He said that the Commissioners were uncomfortable with the proposed design. The Park and Recreation Advisory Commission Special Council Meeting January 3, 1995 Page 3 has identified needs in the community, and facilities for seniors and youth are needed. This proposed facility would not specifically serve those groups. Commissioner Priebe supported the idea of a public/private relationship; however, he is concerned about a 30 -year co -usage arrangement. He believes there is a high risk that the City may not be content with the relationship in five years. He suggested that it would be a better arrangement for the City if the City had the option to buy out the private company in the future for any reason -- even if it was at a premium price. Manager Johnson explained that a ground lease agreement is proposed. The City would establish operating standards for the fitness facility. There is a residential use covenant so that the ground lease depends on Life Time Fitness continuing to provide the facility at a reasonable daily fee rate to residents, following the operating standards, and not defaulting on the mortgage payments. If Life Time Fitness would fail to do so, the City could purchase the property for the remaining amount on the first mortgage. He stated there will also be a $4 million maximum that Life Time Fitness could initially borrow and not exceed for the facility. If Life Time Fitness fails to meet the obligations of the residential use covenant, the City would have the ability to take over the facility. Park Director Blank added that if Life Time Fitness tries to sell the facility, the City has the option to meet the purchase price. Councilmember-Elect Preus clarified that Commissioner Priebe may believe that Life Time Fitness could follow the contractual provisions, but in a few years the City may not believe that the arrangement is working well. Commissioner Priebe concurred that this was his concern. In a few years, residents may not be happy with the facility, and there should be an option for the City to buy-out the fitness facility for any reason. Manager Johnson stated that it will not be acceptable to Life Time Fitness to agree that the City could purchase the facility for any reason. It will be important to Life Time Fitness to continue the business if it is profitable. He said that the City Attorney has advised that the City would have the right to condemn the site if Life Time Fitness failed to meet the City's underlying purpose to serve the community with recreation facilities. Mayor Tierney stated that most community centers do not operate at a profit, and under this relationship with Life Time Fitness, the City will have no risk of future operating deficits. Manager Johnson explained that the annual operating loss for the Shoreview Community Center is between $150,000 and $200,000. This proposed facility would pay about $400,000 in taxes. Manager Johnson stated that the proposed City contribution to the entire project would be about $6.6 million, $5 million of which would come from the Community Improvement Fund. A special election is scheduled for Tuesday, February 6, on the question of whether Special Council Meeting January 3, 1995 Page 4 money should be expended from the Community Improvement Fund for this purpose. The City Council has accepted a nonbinding letter of intent from Life Time Fitness as the basis for future negotiations. Staff and a City Council Subcommittee is continuing to develop a detailed contract. A draft of that contract will be available by next week, and a timeline for the project will be established. Manager Johnson asked whether any design work should be done before February 6. He stated that it will take from 9 to 12 months to develop and construct the ice arena. He explained that beginning some design work now will increase the possibility that the ice arena could be available by late 1996. There would also be an impact on 1997 City revenues. He stated that Life Time Fitness has indicated that October is the ideal month for them to open a facility, and they would like to open by late 1996. He stated that the design money could be risked if the February 6 vote is not successful. Commissioner Bildsoe asked for an estimate of the design work cost. Manager Johnson estimated that the design work for the ice arena would be $150,000 to $200,000. The Wayzata Hockey Association has donated $50,000 toward design of the ice arena. They understand that this money could be risked if the February 6 vote is unsuccessful. He stated that by February 6, about $150,000 could be spent on design work for architects and engineers. Commissioner Wahl asked how the receipt of the Mighty Ducks Grant will impact the. project. Park Director Blank stated there is a meeting on January 11 explained the grant details. Manager Johnson stated that the grant money cannot be used up front for design work. The State wants to ensure that the City is going ahead with the ice arena project before the grant money is released. Councilmember-Elect Black explained that generally the State requires expenses to be submitted, and a certain percentage is then paid with grant funds. She stated the State approval process can also be lengthy. Commissioner Johnson anticipated that residents will be unhappy when asked to pay the proposed daily use fee. He stated that many families have visited other facilities where the daily fee is about half of this proposed daily fee. He also expressed concern that teens in Plymouth still will have no facilities. Mayor Tierney stated that she would like the City to consider a scholarship program to help families who cannot afford the daily fee rate. Manager Johnson stated that the proposed daily fees are $8 for adults, $5 for teens, and 3 for younger children. The adult fee provides access to the entire fitness facility, which is not normally offered in a community center. Special Council Meeting January 3, 1995 Page 5 Councilmember Anderson stated that the City is making a $2 million investment in the facility, in addition to the ice arena. He said there is not Council support for the City to solely design, construct, and operate a $12 million community center. He stated that the interest of Life Time Fitness is to sell memberships. The basic monthly single membership fee is about $30. It will be in citizens' best interest to purchase a membership if they use the facility on a frequent basis. Manager Johnson stated that the proposed youth daily rates are comparable to other facilities. Shoreview charges $2.50 for a child; however, there are extra costs such as $1 for the waterslide and $.25 for locker rental. Park Director Blank stated that if the Council agrees philosophically that there should be a subsidy program for children, staff will develop and recommend such a program. He stated that Plymouth is a financially healthy community, but there is need for this type of program for some families. Councilmember Wold supported the scholarship concept. He does not believe that the proposed daily fees are unreasonable. He stated that residents want low taxes, and Plymouth currently has the second lowest tax rate of any city over 10,000 population in Minnesota. The City cannot continue to keep taxes low if free memberships or access to a fitness club or community center is provided. He believes this public/private relationship is cost effective, particularly since no future operational deficit will be created for the City. Mayor Tierney asked about the rates for the ice arena facility which would be operated by the City. Park Director Blank estimated that the hourly rate for hockey would be $125, with an open skating fee of $2 to $2.50 per person. Commissioner Johnson stated that there is an opportunity cost of this project. The City is proposing to commit the most important parcel of real estate in the City, from a recreational perspective, and turn it over to a private company. He suggested that the City could just build an ice arena at this time, and incrementally consider additional facilities in future years. Councilmember-Elect Preus stated that most other community centers have a family rate. He asked if a family daily rate has been discussed with Life Time Fitness. Manager Johnson responded that Life Time Fitness does not want to offer a family rate because their experience is that it can be badly abused. Life Time Fitness does offer a monthly family membership rate of $69. Mayor Tierney added that Life Time Fitness will offer a 15 percent discount on the initiation fees for Plymouth residents. In response to a question by Councilmember-Elect Black, Park Director Blank stated that a family of four desiring membership would pay a $350 initiation fee, plus $69 per month membership fee. If membership was discontinued and then restarted, the initiation fee would again be required. Special Council Meeting January 3, 1995 Page 6 Commissioner Willegalle asked if individuals holding Life Time Fitness memberships would have free use of the ice arena during public skating hours. Manager Johnson responded yes. Manager Johnson stated that there are two facility options in addition to what has already been proposed. Life Time Fitness has offered to add a third gym to the fitness facility if the City pays an additional $500,000. They would maintain the facility, but the City would have programming priority for the third gym. The second option is a Community Activity Center which could be constructed on the south end of the complex. Staff has met with seniors' groups and it is believed that the facility could be multi-purpose to serve various ages and functions. The proposed Community Activity Center would be about 13,000 square feet and could be used for senior programs, recreational programs, a community rental hall, and a kitchen/restroom facilities to support the adjacent amphitheater. Manager Johnson explained that the Community Activity Center could consist of one large meeting room that could seat up to 300 people, with a catering kitchen, restrooms, and room dividers. The remainder of the facility could serve other functions. Park Director Blank stated that a multi-purpose facility could work well for senior programming during the weekdays, as well as meeting social and community needs that are lacking in the evenings and weekends for all ages. Manager Johnson estimated that the large meeting room could be constructed for about 500,000. The entire Community Activity Center would cost about $1 million. He stated that the entire project currently anticipates a City contribution of about $6.6 million, and the City Council has indicated that it wants to spend no more than about $7 million of City funds on the entire project. Staff believes that the City would get more benefit by building the meeting room, rather than the third gym at this time. There are other proposals under consideration to add gyms in the high schools. Councilmember Anderson asked for opinions of whether the Community Activity Center meeting room or third gym should be the priority if funds are available. All Park and Recreation Commissioners supported the Community Activity Center meeting room as a priority over the third gym if funds are available. Councilmember Wold stated that another full-sized gym is needed in Plymouth. He asked where this could be placed in the future, if it is not added to this facility. Councilmember- Elect Preus favored a multi-purpose Community Activity Center as part of this complex; as did Councilmember-Elect Black. Councilmember Anderson had no strong preference between the facilities, but noted that the City Council voted that $7 million is the maximum City investment for this facility. There may not be funds available to construct either facility. Mayor Tierney supported the Community Activity Center option and noted Special Council Meeting January 3, 1995 Page 7 that this facility would be City -operated. She asked Recreation Supt. Bisek to comment on this proposed facility. Recreation Supt. Bisek stated that with a public/private partnership, the City loses an opportunity to build relationships in the community. She strongly feels that a multi- purpose public meeting room is important to develop a sense of community. Councilmember-Elect Preus asked about operating costs for the third gym or for the Community Activity Center. Manager Johnson stated that Life Time Fitness would pay the operating costs of a third gym. The meeting room would result in no additional City staffing, and it is likely that the rental fees would pay all facility expenses. He compared that to the operating costs of a full senior center with staffing which could be $200,000 per year. The meeting room could be expandable in the future. Councilmember Anderson requested that the Park and Recreation Advisory Commission study and provide operating cost estimates and proposed uses of the Community Activity Center. Commissioner Bildsoe stated that with the current lack of fitness facilities in Plymouth and the demographics of the community, the facilities will be in high demand. Park Director Blank stated that if there is interest, he will arrange a tour of the Life Time Fitness facility in Woodbury on which the proposed Plymouth facility is modeled. Manager Johnson reviewed the proposed public information for the February 6 election. In response to a question by Commissioner Willegalle, Manager Johnson stated that the public information indicates that the City is committed to an ice arena if voters approve the expenditure of money from the Community Improvement Fund. He asked Commissioners and Councilmembers to contact him as soon as possible if changes are suggested to the public information. He asked when the information should be mailed to residents. If the information is mailed prior to the January 22 public hearing, residents will be informed, but information on the School District's participation in the project may not be available. He stated that the January Plymouth News will contain an article on this issue, and the public hearing will be announced via news releases and cable TV. Commissioner Willegalle suggested that the information piece be mailed between January 22 and February 6, in order that residents will have as much information as possible, and the upcoming election will be fresh in their minds. Commissioners and Councilmembers agreed that the mailing should be received by residents between January 22 and February 6. Manager Johnson asked for direction on whether any design work should be done prior to February 6. Councilmembers and Commissioners stated that design work on the ice arena should immediately proceed. Mayor Tierney stated that the City should not delay the Special Council Meeting January 3, 1995 Page 8 design work due to receipt of the Mighty Ducks Grant. Commissioner Wahl noted that the detailed drawings could be used in the future, so the expenditure would not be wasted if construction does not immediately proceed. Manager Johnson asked if any design work should be done as an add -alternate to the bid documents for the Community Activity Center. He stated that if the $500,000 is available now, it may be less expensive to build it along with the rest of the structure. Mayor Tierney stated there may be savings in the grading costs, and she believes the design work should be done now. In response to a question by Councilmember-Elect Preus, Manager Johnson said the cost of the design work for the Community Activity Center would be about $60,000. Councilmember-Elect Preus said the design work should be done in the most economical way. He has no concerns with including the design work for the Community Activity Center. Councilmember Wold agreed that he would be interested in having preliminary plans drawn for the Community Activity Center as an add -alternate bid. He did not support requesting design plans for a third gym because it appears that is not the priority for the Commission or Council. Commissioner Priebe suggested that at a minimum the plans for the Community Activity Center be "etched" so that the mechanical elements of the building can be properly connected in the future. Park Director Blank stated this is particularly important with underground utilities. Manager Johnson stated that the architects could be advised that there is significant interest in an alternate for a Community Activity Center, and they could be requested to prepare a preliminary drawing but no detailed drawings at this time. Commissioners and Councilmembers concurred. Park Director Blank showed a drawing of the proposed amphitheater relocation design. He stated that the cost estimate for the project is $45,000, with the construction management and most of the work done in-house. This cost estimate does not include the trails and roadways that could be done later. Councilmember-Elect Preus asked if the City could suggest a separate fee for individuals wishing only to use the outdoor swimming pool. Park Director Blank stated it is unlikely this would work. It would be difficult to monitor because access to the outdoor pool will be through the fitness club and showers. Park Director Blank stated that there may be possibilities in the community for fundraising for contributions to the multi-purpose Community Activity Center. Special Council Meeting January 3, 1995 Page 9 Commissioner Priebe suggested that the agreement with Life Time Fitness could include a provision that if the facility is really profitable, the daily use fees could be reduced. Manager Johnson stated that Life Time Fitness has agreed to a fee increase cap of no more than the CPI. The meeting was adjourned at 9:00 p.m. Laurie F. Ahrens City Clerk