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Paynesville Press - June 19, 2002

Arena deal between city and township gets closer

By Michael Jacobson

A new financing plan for the Koronis Civic Arena with the city and township sharing ownership of the facility appears to be coming.

Township board chairman Don Pietsch originally brought the matter to the attention of the township board a couple months ago. He proposed a buyout plan with the city and township splitting the cost and each getting 50 percent ownership in the facility.

Right now, the city, township, and PNLS Hockey Association each contribute $7,000 per year for debt retirement, but the problem is that the combined $21,000 barely pays for the interest on the nearly $315,000 in debt on the facility. Pietsch raised the matter because, in 16 years, the township could be left alone to pay for the entire facility.

Pietsch received permission from the township board to negotiate with the city, along with clerk Don Wiese, on a joint venture to pay for the facility. Pietsch reported back to the township board on Monday, June 10, with the results of those negotiations. He wanted to get confirmation to the board's intentions before they started to address rewriting the contract with the hockey association.

The tentative plan with the city calls for each to play roughly $157,000 up front to pay off the debt on the facility. Then, instead of paying $12,000 apiece a year ($7,000 for debt retirement and $5,000 for operations), the city and township would each pay only $1,000 per year for operation.

The hockey association, according to this plan, would have to pay an extra $1,000 per year. Instead of $7,000 for debt retirement and $5,000 for operation, the hockey association would pay $13,000 per year for operation, which combined with the $1,000 from both the city and township would continue to give $15,000 for operation, mainly for salaries.

The arena ownership agreement would not include the township office or the township parking lot to the south, but would include the parking lot to the east used primarily by arena traffic.

The city and township, if the agreement is finalized, would also split maintenance on the facility, while the hockey association would be responsible for the interior operation of the facility.

A key maintenance question are the cubes in the ice-making equipment which cost $50,000 apiece and have an expected useful life between 15 and 25 years. Due to a Mighty Ducks grant used to construct the arena, the township is committed to running it as an ice arena for 40 years, meaning the city and township should expect to replace the two cubes at least once in that time.

The arena would have a joint committee of one voting member of the city council and township board, a nonvoting member from the city and township, and the president of the hockey association, who also would be a nonvoting member.

"We think it's a good facility and we think it's a good community project, not just a township or a city project," said Pietsch.

The board voted unanimously to continue to negotiate an arena agreement with the city.

Supervisor John Atwood originally voted against approaching the city about the arena, but he voted in favor this time. He had previously called for the township to look at refinancing the arena on its own, but had since found that the interest rates quoted to him required the township to put all its CDs in that financial institution.

If an agreement is finalized, the township board will still need to decide whether to finance its portion of the payment to retire the debt or to pay for it out of reserves.

The city and township committee members met on Friday with representatives of the hockey association to redo some language and figures in the lease agreement.

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