Ice arena work could be pushed back

Posted 7/6/22

By John McLoone The City of Hastings hoped to receive a big chunk of money towards necessary improvements from the Minnesota legislature’s bonding plan for this year. However, lawmakers adjourned …

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Ice arena work could be pushed back

Posted

By John McLoone

The City of Hastings hoped to receive a big chunk of money towards necessary improvements from the Minnesota legislature’s bonding plan for this year. However, lawmakers adjourned for the summer in May without voting on a bonding plan.

That puts the city in a difficult position.

With considerable fanfare, in January, Gov. Tim Walz earmarked $1.46 million toward the project. Planned work needed at the ice center are a new refrigerant system and replacement of the west rink roof. In addition, solar panels would be put on the building’s roof.

At that time, the funding would have been for about half of the project, which has now risen to $4 million.

The city council was expected to deliberate on the future of the project at its meeting this week, which was pushed to Tuesday, July 5 because of the Independence Day holiday, past press time.

If the city is to complete the ice center work in 2023, the council would have to pass a resolution for a $200,000 budget adjustment to purchase components for the project that would be reimbursed by city bonding when the project gets underway. Those valves and a motor control center would take up to 10 months for delivery.

City Administrator Dan Wietecha recommended pushing the project back.

In a memorandum to the council, he wrote.

“If the City Council wishes to proceed with the Civic Center project in 2023, approve a budget amendment of $200,000 for purchase of

CIVIC CENTER, Page 5 CIVIC CENTER

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relieve valves and motor control center, with the intent that these items be reimbursable by future bond proceeds.

“Note: I recommend delaying the project in favor of pursuing other financing options.”

He said that working the project into the city budget would be difficult (see related article on the start of the city budget process).

“As we’ve seen the cost increase (from $2.6 million to $4 million), the state legislature did not act on a bonding bill (we requested $1.45 million in assistance), and it would be very tight for the city to finance two projects in one year (the other being the 2023 Neighborhood Project) – it may be better to delay the project to pursue other financing options,” said Wietecha.

He said with annual maintenance and purchase of additional refrigerant, the ice arena should be able to operate for the next few years.

“Barring a catastrophic failure of the refrigeration system, we anticipate being able to continue this ‘band aid’ approach for several years,” said Wietecha.

The current construction estimate for the project is $2.4 million for the refrigeration system, and $790,000 for the west rink roof. In addition, solar panels would be added to the roof at a cost of $215,000. In addition, a “Low E” ceiling would be installed to better insulate the arena which saves on refrigeration. That would cost $119,000, and LED lighting upgrades are projected at $400,000.

Energy savings are projected at $51,000 annually, and that money would be directed toward bond payments. The bonding for the project would be under state statute that allows for Energy Efficiency Improvements, which would allow the city to streamline the process if it’s going to be done next year.

Wietecha pointed to other options for financing the projects. His memorandum outlines them: “Options for a 2023 project or a later project:

•School JPA (Joint Powers Agreement) – The City and School District have a long history of sharing in expenses of projects (on a casebycase basis) that are mutually beneficial, including the eastrink roof around 2008. Whether the project occurs in 2023 or later, we will negotiate this with the school and are presently scheduling a meeting to discuss the project and finances with the school.

•State Bonding, current request – We applied for state bonding in the amount of $1.45M (based on a project cost estimate then at $2.9M). The legislative session ended without a decision on any bonding projects. If there is a special session, our current request would still be proposed (and we could request additional funding due to increased cost). Options only for a delayed project:

•State Bonding, future request – We can reapply for state bonding (and based on the current cost estimate) in a future legislative session.

•Local Option Sales & Use Tax – Recognizing the regional impact of the Civic Center, we could pursue authorization for a halfcent local sales & use tax. The steps in the process would result in a 2 to 3 year wait before construction. The authorization process first requires state approval and then approval by City voters. Advantages of this option is that it gets it off the property tax and some communities have seen close to 50% of the sales tax revenues coming from nonresidents. This could also be an option for other, separate projects such as the trails or a major park.

• Referendum – The financial difficulty of trying to accommodate two major projects (the other being the 2023 Neighborhood Project) in one year could be eased by “separating” this project from the CIP and bringing it to City voters under a referendum. During the June 20 City Council budget workshop, there was general support for a referendum approach to addressing a broad trails and parks improvement plan. Noting that the School District is expected to seek a referendum in November 2023, this would need to be timed so the two don’t compete against each other.”

The Hastings Civic Center was built in 1980, and its R22 freon refrigeration system is against current federal Environmental Protection Agency standards. The new refrigeration system would be ammonia based.

Funding for the Hastings Civic Center Ice Arena was included among state bonding recommendations, but the Minnesota State Legislature adjourned in May without voting on a bill. Journal file photo