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|Paynesville Press - September 18, 2002|
Township pays off debt for the Koronis Civic Arena
Paynesville Township has used reserve funds to pay off the debt on the Koronis Civic Arena.|
In August, the supervisors voted to pay a $248,000 bank loan for the facility, stemming from the remodeling project five years ago when the equipment for making artificial ice was installed.
Last week, the supervisors voted to pay off the remaining debt, a low-interest loan from Xcel Energy. The township qualified for the loan due to the efficiency of the ice-making equipment in the arena.
About $75,000 remained on this loan at 4.9 percent interest. That interest rate, while lower than the bank loan (which was at 6.5 percent when paid off), was the reason the township board decided to pay off all the debt, instead of continuing to make monthly payments of $4,200 until February 2004.
With an $81,000 CD coming due, the board noted that paying off the debt, and saving the interest, offered a higher yield than any interest the money could generate. "We can't do better than paying the 4.9 percent off right now," explained board chairman Don Pietsch.
Since the township is responsible for maintaining ice in the arena for 40 years, the board reiterated the need to establish a maintenance fund to pay for the replacement of the ice-making equipment in the future. The township may want to consider levying money specifically for arena maintenance, said Pietsch.
"It would be nice to have a fund set up," agreed supervisor Pat Meagher. A maintenance fund will be established, according to a new agreement between the township and the Paynesville-New London-Spicer Hockey Association. The $7,000 per year that the hockey association used to spend on debt retirement will now be put in an escrow fund for future maintenance needs at the arena.
The hockey association will continue to spend $12,000 per year for arena operation, in addition to their volunteer efforts with their youth hockey programs.
The township board approved a new lease and letter of understanding with the hockey association at their meeting on Monday, Sept. 9. The hockey association approved the agreement at their meeting on Wednesday, Sept. 11.
In the past, the township, the city, and the hockey association have contributed $5,000 per year toward salaries at the arena and $7,000 per year towards debt retirement. The township, though, discovered this year that the money for debt retirement was barely covering the cost of interest payments, and little was being paid on the principal.
With the township paying off the debt using reserve funds, the hockey association will still pay $5,000 per year towards salaries at the arena. And the hockey association will be responsible for getting a $5,000 annual contribution from the city for salaries, in exchange for open skating at the arena.
These contributions will be re-examined annually.
The new lease agreement takes effect on Oct. 1, 2002, and lasts for 20 years. It also establishes an advisory arena board with two township supervisors and three hockey association board members to make recommendations to the hockey association and the township board about the arena.
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