07/16/2002 - City Council SpecialAGENDA
SPECIAL CITY COUNCIL MEETING
TUESDAY, JULY 16, 2002
5:30 PM
CITY HALL COMMUNITY ROOM
I. ROLL CALL & AGENDA ADOPTION
II. VISITORS TO BE HEARD
III. DISCUSSION RE: PROPOSED 2003 CIVIC ARENA BUDGET
IV. OTHER BUSINESS
V. ADJOURNMENT
a.~-~-
TO:
FROM:
DATE:
SUBJECT:
MEMO
City of Eagan
HONORABLE MAYOR AND CITY COUNCIL MEMBERS
CITY ADMINISTRATOR HEDGES
JULY 12, 2002
JULY 16 SPECIAL CITY COUNCIL MEETING
Per the direction of the Council, a Special City Council meeting has been scheduled for
July 16 at 5:30 PM in the Community Room to further discuss the proposed 2003 Civic
Arena budget. Staff has compiled the data that you requested. Enclosed on pages ~,
through ~ is a memo from Director of Administrative Services VanOverbeke to City
Administrator Hedges with various attachments.
As is our usual practice, the Special City Council meeting will be taped for cable
broadcast. Sandwiches will be available at SPM if you would like to eat prior to the
meeting.
Please feel free to contact me if you have any questions prior to the July 16 Special City
Council meeting.
City Administrator
~y` MEMO
city of eagan
TO: City Administrator Hedges
FROM: Director of Administrative Services VanOverbeke
DATE: July 12, 2002
SUBJECT: Civic Arena Budget Information
I am writing this memo at your request to provide additional information for the City
Council regarding the proposed 2003 Civic Arena Budget.
Revised Revenue Projection Presentation
Enclosed on page ~ is a copy of revised Civic Arena Revenue information that
consistently matches the various revenue line items between 2002 and 2003. The
2002 total is also corrected to include the budgeted amount of interest earnings.
Ice Rental Revenue Projections
Enclosed on page ~ is a worksheet outlining how the 2003 ice Renta! for both
the Exempt and Non-exempt line items.
Eas~an Athletic Association Capital Contribution
To assist in financing the construction of the East arena in 199711998, the Eagan
Athle#ic Association (EAA) agreed to contribute $500,000 over a ten (10) year period.
The first two payments of $50,000 and $59,500 went directly to the construction fund
and were used to pay for construction costs. In order to have the balance of the cash
available to pay for construction the City borrowed internally from the Community
Investment Fund (CIF) the balance of the present value of 10 years worth of $50,000
payments.
The following tables summarize the finanaal transactions to account for the
contributions:
Advanced From the CIF
Present Value $405,000
Advance Payments: (50,000)
5( 9.500)
Borrowed From CIF $295,500
EAA Con#ributions
Pledged Amount $500,000
Payments To Const: (50,000)
(59,500)
Payments To Debt: (25,000]
3 ~ $50,000 15f 0.000)
Balance Due 7-12-02 $215,500
CIF Status
Total Advanced $295,500
Total Received and Due $390,500
Interest Eamed $95.000
The repayment of the loan to the C!F is not reflected in the accounts of the Civic Arena
as the construction financing is complete. This process is exactly the same as is
currently being used to constnact the Community Center except those funds have been
borrowed extematly. The annual debt service levy of approximately $1,400,000 is
being used to repay the money borrowed to pay for the construction. The annual levy
of $1,400,000 is a financing issue and will have no impact on annual operations nor will
the debt service transactions be accounted for in the Community Center Fund.
Civic Arena Revenue Bond
A major component of the cons#ruction financing for the East Arena was the sale of a
20 year Ice Arena Gross Revenue Bond in the amount of $1,565,000. The first
payment was made in 1999 and the last payment is due in 2019. Debt service is paid
from operations and approximates $126,000 annually. The first year (1999) was higher
because of longer interest period. The complete debt service schedule is enclosed
on pages ~~ and _~_.
Civic Arena Ouerations On A Cash Basis
Enclosed on page ~, is a one page worksheet that attempts to place the results
form the operations of the Civic Arena on a cash basis. Information is carved forwarcl
from the beginning through the projected results assuming the 2003 budget
information.
I would like to call your attention to the following spec information noted on the
worksheet:
The top section of the worksheet (Numbers 1 through 7) shows cumulative cash from
operations for all years of operation including the 2003 budget projections.
1. The top section of the worksheet shows the cash received from and disbursed
on operations added together to show a net cash profit.
a
2. The cash outlays for debt service, capital expenditures, and capital replacement
reserves are subtracted.
3. The difference between cash taken in and total cash disbursed is shown as
excess revenues.
4. The cant' forward results from the previous year are noted.
5. The cant' forvvard amount is added #o the current year results to provide a
cumulative excess of revenues.
The results form operations show dramatic, positive increases through 1998.
Beginning in 1999 when debt service obligations were added (6), excess revenues
became a negative number as disbursements have exceeded receipts in every year.
Continuing the trend, the cumulative balance is projected to be negative at the end of
2003 (7).
The middle section of the worksheet divides the total cash balance (line 10) between
the cash reserved for renewal and replacement (line 8) and the cash available for
operations (line 9) as developed in the top section of the worksheet.
The bottom section (line 11) shows the primary hourly ice rental rate for each year.
~cial Citv Council Meetinst of July 9. 2002
Enclosed for your reference is the complete information as presented far the Special
City Council Meeting held on July 9, 2002.
Directorb~Administrative Services
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Exempt
Eagan Youth Hockey for 2002-03
Eastview Hockey for 2002-03
District Toum 2003
High School for 2001-02
Tryouts/Ginics for Eagan
Tryouts/clinics for Eastview
Captains for Eagan-boys
Captains for Eagan-Girls
Captains for Eastview-boys
Satellite Training Program-Eagan
Total
2002 Known
Gross Hourly 2003
Dollars Rates Notes Hours
182,641.25 ($145.00) (1) 1261.25
36,965.00 ($145/150) (2) 250
4,785.00 ($145) (1) 33
82,776.00 ($145) (3)
15,540.00 ($110.00) (4)
13,465.00 ($110.00) (4)
4,070.00 ($110.00) (4)
2750 ($110.00) (4)
1,815.00 ($110.00) (4)
4,197.00 ($110.00) (4)
349,004.25 (Budgeted for 2003 at $345,000)
Notes:
(1) Assumes a $5 increase to the 2002 hourly rate.
(2) Shows the $5 increase and the $5 surcharge to the Eastview Hockey Association for the
East Arena.
(3) 2002 High School rate, pending Council authorization to add $5.00 higfi school surcharge.
(4) The before 10-01-XX rate.
Non-exempt
The 2003 budget projection of $80,000 is based on the 2002 actual of $84,828 and assumes
a potential loss of one tournament and the proposed hourly rate increase of $5 per hour.
Hourly Rates
1995 1996 1997 1998 1999 2000 2001 200:
120/hour 125/hour 125/hour 130fiour 135/hour 135/hour 135/hour 140/hour
5
CITY OF,EAGAN, MINNESOTA Prepared March 27, 1998
ICE ARENA GROSS REVENUE BOND, 19986 By SPRINGSTED Incorporated
POST SALE DEBT SERVICE
Bond Date: 4/ 1/1998
Sale Date: 3/26/1998
Issue Size: $1,565,000
Annual
Date Principal Rate Interest Total Payment
4/ 1/1999 45,000 4.000 82,365.00 127,365.00 127,365.00
10/ 1/1999 ,~,- =~- 40,282.50 40,282-.50
4/ 1/2000 45,000 4.400 40,282.50 85,282.50 125,565.00
10/ 1/2000 _ ~ 39,292.50 39,292.50
4/ 1/2001 50,000 4.500 39,292.50 89,292.50 128,585.00
10/ 1 /2001 ~ .,;~;,-< - 38,167.50 38,167.50
4/ 1/2002 50,000 4.600 38,167.50 88,167.50 126,335.00
10/ 1/2002 ,z7~_ .ro 37,017.50 37,017.50
4/ 1/2003 55,000 4.750 37,017.50 92,017.50 129,035.00
10/ 1/2003 _ ~ 35,711.25 35,711.25
4/ 1/2004 55,000 5.000 35,711.25 90,711.25 126,422.50
10/ 1/2004 ~ 34,336.25 34,336.25
4/ 1/2005 60,000 5.100 34,336.25 94,336.25 128,672.50
10/ 1/2005 ,_ - 32,806.25 32,806.25
4/ 1/2006a 60,000 5.250 32,806.25 92,806.25 125,612.50
i0/ 1/2006 31,231.25 31,231.25
4/ 1/2007a 65,000 5.250 31,231.25 96,231.25 127,462.50
10/ 1/2007 - 29,525.00 29,525.00
1/ 1/2008a 70,000 5.250 29,525.00 99,525.00 129,050.00
.0! 1/2008 - 27,687.50 27,687.50
4/ 1/2009a 70,000 5.250 27,687.50 97,687.50 125,375.00
10/ 1/2009 25,850.00 25,850.00
4/ 1/2010b 75,000 5.500 25,850.00 100,850.00 126,700.00
10/ 1/2010 ~~ 23,787.50 23,787.50
4/ 1/2011b 80,000 5.500 23,787.50 103,787.50 127,575.00
10/ 1/2011 - 21,587.50 21,587.50
4/ 1/2012b 85,000 5.500 21,587.50 106,587.50 128,175.00
10/ 1/2012 19,250.00 19,250.00
4/ 1/2013b 85,000 5.500 19,250.00 104,250.00 123,500.00
10/ 1/2013 ~,::~=~ 16,912.50 16,912.50
4/ 1/2014b 90,000 5.500 16,912.50 106,912.50 123,825.00
10/ 1/2014 - 14,437.50 14,437.50
4/ 1/2015b 95,000 5.500 14,437.50 109,437.50 123,875.00
10/ 1/2015 -~~ 1 ' 11,825.00 11,825.00
4/ 1/2016b 100,000 5.500 11,825.00 111,825.00 123,650.00
10/ 1/2016 .__ _ 9,075.00 9,075.00
4/ 1/2017b 105,000 5.500 9,075.00 114,075.00 123,150.00
10/ 1/2017 _ _ 6,167.50 6,187.50
4/ 1/2018b 110,000 5.500 6,187.50 116,187.50 122,375.00
10/ 1/2018 ,_ .,. 3,162.50 3,162.50
j --+. .= -
CITY OF EAGAN, MINNESOTA
ICE ARENA GROSS REVENUE BOND, 19988
P05T SALE DEBT SERVICE
Date Principal Rate
i~S,~t o
4/ 1/2019b 115,000 5.500
TOTALS 51,565,000
Discount (plus)
Net Interest Cost
Prepared March 27, 1998
By SPRINGSTED Incorporated
Bond Date: 4/ 1/1998
Sale Date: 3/26/1998
Issue Size: 51,565,000
Interest
3,162.50
Total
118,162.50
Annual
Payment
121,325.00
51,078,530.00 52,643,630.00 52,643,630.00
523,475.00
51,102,105.00
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AGENDA
SPECIAL CITY COUNCIL MEETING
TUESDAY, JULY 9, 2002
5:30 P.M.
CITY HALL COMMUNITY ROOM
I. ROLL CALL & AGENDA ADOPTION
II. VISITORS TO BE HEARD
III. PRESENTATION BY DAKOTA COUNTY PARKS RE: METHODS
TO IMPROVE WATER QUALITY THROUGH LOW IMPACT
DEVELOPMENT
IV. CLARIFICATION OF R-4
V. CEDAR GROVE DEVELOPMENT
VI. 2003 CIVIC ARENA BUDGET
VII. WASTE REDUCTION COMMISSION REPORT & PROPOSED
ORDINANCE
VIII. DIRECTION RE: ORDINANCE REGULATING THE SALE OF
PHOSPHORUS FERTILIZER
IX. OTHER BUSINESS
X. ADJOURNMENT
9
Ryan Proposal - In May 2002, Ryan Companies presented its development proposal to the City
Council for the Cedar Grove North District and discussed its need for financial assistance. The City
Council directed staff and Ryan to negotiate an agreement. Since that time, staff and project
management consultant Ehlers have worked with Ryan to evaluate options that might increase total
project value and reduce the amount of assistance being requested. More than likely, value can be
increased with an increase in the amount of office space. This increase in office space however, has
consequences for the traffic management plan for the area that could negatively affect other azeas.
This analysis will be presented for Council consideration.
Senior Housing Proposals -Three developers previously expressed interest in developing senior
housing on the south corner of the Cedar Grove Pazkway/Silver Bell Road intersection (across from
McDonald's). Ehlers and staff aze confident that each of the developers has the financial capacity
and experience necessary to deliver a quality product. There was some question at the May
workshop as to the density of at least one proposal. As a comparison to what may be developed in
the Cedar Grove area, the Commons on Marice senior community is often cited by the City as an
excellent example of design and land use. That property has a unit density of 35 units per acre, or
156 units on 4.4 acres. Each of the three interested developers has been directed to prepaze a pro
forma that does not exceed that density. The updated development programs will be presented to
the City Council for consideration and direction.
Property Acquisitions -The City has purchased a number of properties in the Cedaz Grove
Redevelopment Area (CGRA) to facilitate infrastructure improvements and hasten the development
process. In addition to the properties acquired for Project 800, the City has purchased a vacant lot
on the corner of Cedar Grove Pazkway and Gold Trail, and the property formerly occupied by
Valley Bike & Ski west of Cedarvale Mall on the north side of Cedaz Grove Pazkway.
Staff has been approached by a number of business property owners concerned about the future of
the area and the continued viability of their businesses. In these circumstances, business-owners aze
encouraged to develop as many options as early as possible. Jim Cooper Goodyeaz and Eagan Pet
Clinic are examples of two businesses that have been proactive in finding relocation sites for their
businesses. Additionally, Pro-Wire is in the final stages of building a new site and has been trying
to sell its CGRA property.
There are a number of options to the City related to property acquisitions. Staff and consultants will
discuss these options in greater detail and evaluate the pros and cons to the City.
DIRECTION TO BE CONSIDERED:
Give staff direction regarding continued negotiations with Ryan Companies; possible developer
selection for senior housing; and property acquisition in the Cedaz Grove Redevelopment Area.
2003 CIVIC ARENA BUDGET
Traditionally, the Civic Arena Budget is given special consideration in advance of other Public
Enterprise and General Fund Operating Budgets due to the fact that operations run more concurrent
~ io
with a fiscal year starting in September than the traditional calendaz yeaz. To finalize both expenses
and revenues for the 2002-2003 Civic Arena Operating Budget, Council policy relative to the proposed
fees for the Civic Arena will need to be approved at the July 16 City Council meeting in order to
provide the proper communication to various individuals and organizations that aze planning to
schedule use of the Civic lAre~nas. ~~
Enclosed on pages Through ~ is a copy of a memo to the City Council from the City
Administrator and a proposed 2003 Civic Arena Budget/memo from the Civic Arena Manager and
Parks and Recreation Director Vraa.
DIRECTION TO BE CONSIDERED:
To provide direction regazding, specifically, the hourly fees for the 2002-2003 skating season.
WASTE REDUCTION COMMISSION REPORT & PROPOSED ORDINANCE
Over the past few months, the Waste Reduction and Recycling Commission (WRAC) has diligently
worked on revising City Code Section 6.37 regarding the licensing of waste haulers. Attached on
pages through~s a summary of the revisions and the proposed revised ordinance
amen ment for Section 6.37. The Chair of WRAC, Rick Patraw and Vice Chair, Clint Hooppaw,
will be present on Tuesday to highlight the code revisions, as well as share with the Council a
summary of the commission's work over the past yeaz. Per the direction of the City Council, the
Code amendment will be the last action to be taken by WRAC prior to the commission being
disbanded. City Council and staff will have the opportunity on Tuesday to thank the WRAC
commissioners for their commitment and service to the City of Eagan.
DIRECTION TO BE CONSIDERED:
To consider revising City Code, Section 6.37 regarding the licensing of waste haulers.
PHOSPHORUS FERTILIZER "SALE" ORDINANCE
As you may recall, this past April, state legislation (SF-1555) was passed regarding the use and sale
of phosphorus lawn fertilizer.
The League of Minnesota Cities has recently called to our attention that while the legislation gives
the state authority to regulate both the use and sale of phosphorus lawn fertilizer, the state has opted
not to exercise their authority over the sale of the fertilizer when the bill goes into effect on January
1, 2004. Therefore, with the passage of SF-1555 into law, local governments have until August 1,
2002 to enact ordinances regulating the sale of phosphorus lawn fertilizer if they want this authority
to continue after January 1, 2004. If Eagan chooses not to exercise authority over the sale of
phosphorus lawn fertilizer, then come January 1, 2004 there will be no regulations on the sale of
phosphorus lawn fertilizer in Eagan since state law preempts local law at that point, and the state
law only covers the use of phosphorus lawn fertilizer, not its sale. Attached on pages ~ through
is a summary of the legislation, as well as a proposed ordinance from the City of Shorewood to
regulate the sale of phosphorus lawn fertilizer.
~ 11
• ~ i J+~-
TO:
FROM:
DATE:
MEMO
City of Eagan
HONORABLE MAYOR AND CITY COUNCIL MEMBERS
CITY ADMINISTRATOR HEDGES
JULY 5, 2002
SUBJECT: CIVIC ARENA BUDGET
In preparation for the Council's consideration of the Civic Arena budget, Civic Arena
Manager Mark Vaughan and Parks and Recreation Director Vraa presented the Civic Arena
budget to City Administrator Hedges, and reviewed anticipated revenues and expenditures.
On the expense side, increases are anticipated in salary and wages, contractual services, and
merchandise for resale. Additionally, there is a $20,000 proposed increase in capital outlay.
Also, please note there is a $3,000 spike in debt service, which is the scheduled debt service
payment for 2003. For a more detailed description of the proposed expenditure increases,
please see the attached memo.
The anticipated 2003 Civic Arena revenues do not adequately balance the proposed
expenditures. If the ice rental fee were increased by $5/hour, a revenue shortfall would still
exist. In light of the shortfall, two options that the Council may wish to consider are:
1) Decrease the capital outlays
2) Decrease a portion of the capital outlays and consider an additional $10/hour in rental
fees. If a $10/hour increase were approved, Eagan's Civic Arena ice rental charge
would be $150, which is in line with ice rental charges in our neighboring
communities, such as Burnsville ($155/hour) and Apple Valley ($145/hour). Newer
Civic Arenas, such as Minnetonka and Victoria are currently charging $175/hour in
ice rental fees.
Civic Arena Manager Vaughan has presented excellent discussion items in his attached
memo, which the City Council may wish to review in preparation for Tuesday's budget
discussion. In presenting the budget for 2003, it was staff's goal to continue the tradition of
taking an entrepreneurial vantage to the City's operations in order to stabilize the fees to our
residents, and continually create revenue-producing programs and operations in order not to
become dependent solely on increased ice rental fees.
If you have any questions about the proposed Civic Arena budget prior to Tuesday, please
feel free to contact me.
City Administrator --
~ is
o
To: Tom Hedges, City Administrator
From: Mark Vaughan, Civic Arena Manager
CC: Ken Vraa, Director of Parks and Recreation
Date: July 2, 2002
Re: 2003 budget
Attached is the proposed 2003 budget for the Eagan Civic Arena, which includes some
options to help balance the budget. Also inGuded are a debt payment and the Capital Repair
and Replacement spreadsheets. You will recall that the Civic Arena moved its budgeting
year to September 1 through August 31 but the budget started on January 1.The operation
spreadsheet reflects actual numbers for 1997 through 2001, the 2002 budget numbers and
the proposed 2003 numbers. (Please note that the 2001 numbers are not the auditor's official
numbers.)
The 2003 proposed budget reflects an increase in expenses. Most notable are the accounts
for contractual services, merchandise for resale and capital outlay.
Preliminarily, the 2002 final reports show $32,000 allocated to the Capital and Repair
account. After the reduction of $5,000 to purchase the equipment washing machine, the 2002
budget for the Civic Arena is approximately $4,000 short of the Repair and Replacement
goal.
Estimated Revenues:
The 2003 numbers are based on past history and the most current trends of arenas. The
2003 projections use an increase of $5.00 per hour to the prime hours, which will produce
approximately $10,000 annually.
Other notable revenues include Spring Home and Leisure Show, turf rentals, equipment
washing machine and dry floor programming. These account numbers were included in the
2002 Arena program revenues. For 2003, the numbers have been ident~ed, as a line item to
break down the acxount the arena program revenue account is a reflection of the Skate
School registrations.
You will note that the revenue portion of the budget shows an incxease of $56,400 from the
2002 budget.
~ Page 1
r3
Expenses:
There are three line items that have major adjustments compared to previous years. They
are merchandise for resale, other contractual services and other improvements.
Merchandise forresale:
Staff was over budget in the past two years in this account because of higher revenue
generation. Staff is adding an extra $6,000 to this line item.
Ofher contractual services:
This account is used when staff has to bring in a contractor or vendor for speaal events.
In these instances, revenue covers the cost. Examples would be the marketing assistant
for the Home and Leisure show or high school announcers and timekeepers. Staff is
adding $ 5,500 to this account.
Other improvements~Capital:
The following is a breakdown of this account for improvements to the Civic Arena
operations and service.
Building door security: $ 9,000
Security system from Cascade Bay: 3,000
Added Heating capacities to East Arena 6,000
Rental locker rooms 2,000
Total improvements/Capital $20,000
Budget Summary
Proposed expenditures: $599,400
Debt Service 129,035
Reserved for renewal and replacement 36,000
Total $764,435
Less Operational Revenues 737,000
Difference 3 (27,435)
Balancing the budget:
There are a few options to help balance the budget. The first would be to raise the ice time
rate to close the gap. A survey concluded demand for prime time ice rates is $145.56 for
nine surrounding communities. Remembering that the cun'ent budget numbers include a
$5.00/hour increase already, the gap could be closed by adding another $15.00 increase in
prime ice time. This would put the rate for the 2002-03 ice season at $160.00/hour. A few
community arenas are at a higher rate of $175.00/hour for prime ice time.
• Page 2
1 `~
Removing all capital improvement ideas will reduce expenses by $20,000. Capital items
could be completed by borrowing from the Capital Repair and Replacement fund or from
excess revenue from previous years
Discussion items to help with the budget:
a) Ice Usa4e. Local hockey associations, high schools or city programs are the primary
renters of prime ice time. In the non-prime season the Civic Arena has built up a
clientele that produces a decent amount of revenue given this very competitive
market for ice time. Staff will be working to add programs for future "off season" ice
use, but will mainly concentrate on retaining its current customers.
b) Skate School: The Eagan Skating School has maximized their opportunity to grow
with the currently allocated ice time. There is room for growth in the "off season" as
the program begins to produce more upper level skaters. Skating School Director
Barb Yackel was hired last season and helped the program control expenses and
maximize revenues.
c) Equipment Washing Machine: Staff is very disappointed in what the machine offered
for service and revenue. Revenue dollars were adjusted for the 2003 budget. Staff is
working on changing the marketing to target certain users.
d) Potential of Civic Arena: Moving away from Ice/turf rentals and dry floors programs,
the Civic Arena Manager has made contacts with certain promoters and created
some non-traditional uses for the Civic Arena.
e) Debt service and CRR: These schedules are included in the packet. You will notice
that this was a year where an increase in the debt payment was required. Staff
appreciates the value of the capital repair and replacement account in planning for
future issues of an aging building.
f) Civic Arena Fund: As an enterprise facility, the dollars collected beyond
revenue/expenses are kept in a fund for the Civic Arena for future use. Should those
dollars be used to upgrade the facility or used to offset unbalanced budgets?
g) Mezzanine of fhe West Arena: The Civic Arena manager has had discussions with a
few individuals/groups to complete the upstairs of the West arena. Staff recognizes
the value of the mezzanine area. Should this expansion be considered?
• Page 3
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