09/06/1994 - City Council SpecialAGENDA
SPECIAL CITY COUNCIL MEETING
Tuesday
September 6, 1994
5:00 p.m.
Eagan Municipal Center Lunchroom
I. ROLL CALL & ADOPTION OF AGENDA
II. REVIEW PLANS & SPECIFICATIONS /CIVIC ARENA PROJECT
REVIEW RESULTS OF REVENUE VERIFICATION FOR THE EAGAN
CIVIC ARENA CAMPAIGN
III. OTHER BUSINESS
IV. ADJOURNMENT
city of eagan
TO: HONORABLE MAYOR & CITY COUNCILMEMBERS
FROM: CITY ADMINISTRATOR HEDGES
DATE: SEPTEMBER 2, 1994
SUBJECT: SPECIAL CITY COUNCIL MEETING /TUESDAY, SEPTEMBER 6, 1994
A Special City Council meeting is scheduled for Tuesday, September 6, 1994 at 5:00 p.m.
for the purpose of meeting with the City's architect, ACC, and representatives of the Civic
Arena Fundraising Committee to review plans and specifications and a revenue
verification for the civic arena project.
Attached on pages .2 through / is a memo that includes information about the
status of plans and specifications and the verification of contributions, etc. that were
coordinated by the Civic Arena Fundraising Committee.
OTHER BUSINESS
There are no items for Other Business scheduled for the work session.
/S/ Thomas L. Hedges
City Administrator
MEMO
TO:
HONORABLE MAYOR & CITY COUNCILMEMBERS
CITY ADMINISTRATOR HEDGES
SEPTEMBER 1, 1994
CIVIC ARENA PLANS & SPECIFICATIONS
CIVIC ARENA FUNDRAISING VERIFICATION
Civic Arena Plans & Specifications
FROM:
DATE:
SUBJECT:
MEMO
city of eagan
Following the August 16 Special City Council workshops, the City Administrator was
directed to coordinate two (2) meetings regarding the civic arena project. A meeting was
held on Tuesday, August 30, at 4:30 p.m. with Mayor Egan; City Councilmember Hunter;
Director of Parks & Recreation Vraa; Mary Pontrelli, President of the Eagan Hockey
Association; Paul Dahlberg, architect from ACC; and the City Administrator to review
design and development plans for the Eagan civic arena project. The architect presented
a variety of alternatives for discussion and explanation, allowing the Committee to
consider a project budget at $1.9 million for the civic arena building.
There are several public policy questions that will need to be addressed relative to final
plans and specifications for the proposed civic arena building. In order to meet the
project budget, there are a number of revisions being proposed for City Council
consideration that may be speced as alternates at the time the project is bid in January.
Alternatives to reduce project costs range from a sand floor that would eliminate any hard
surface activities absent an ice surface to removal of concessions that reduces revenues
and restricts the use of the facility for special events, i.e. tournaments. The architect is
confident the project can be built within a budget of $1.9 million; however, the Committee
realizes that the scope of the project will change due to the number of modifications
required to meet budget. Attached and referenced as pages 6 through R' is a
handout provided to each member of the Committee that reviews items reduced/
eliminated at the schematic design phase and explains the various revisions that are
possible for the project and the impact for future operations, such as: 1) lack of heat may
reduce the number of participants in open general skating; 2) no bleachers or a major
reduction in the number of seating may place some additional restrictions on the use of
the facility; and 3) a delay in concessions will impact anticipated revenue for operations.
The Committee, consisting of Mayor Egan and City Councilmember Hunter, suggested
that three (3) basic conditions be given public policy consideration by the City Council.
Those include: 1) the project be revised in order to stay within a base bid estimate of
$1.9 million; 2) certain enhancements to the building project be bid as alternates; and 3)
the design and initial construction allow for certain improvements to be added at a later
date, possibly after the civic arena is in use. The Committee is of the opinion that
decisions can be made at the time bidding occurs, that will allow the City Council to
further consider the overall project scope. In other words, if the City should receive
favorable bids, certain alternates may be included that will enhance operations, thus
providing greater public use and revenues.
The Director of Parks & Recreation has repared a civic arena operational budget which
is enclosed on pages ? through for City Council review. This budget takes into
consideration revenues from concessions, open skating, dry floor operations, high school
practice and games and other operating uses that may or may not be collected
dependent upon a final design and project scope once bids are received and awarded
in early 1995.
Civic Arena Fundraising Verification
At the direction of the City Council, the City Administrator and Director of Finance have
undertaken the project of verifying the pledges and the financial position of the Eagan
civic arena campaign. A meeting was held on August 30, 1994, with Brad Schmidt to
again review the information as it was previously presented to the City Council.
Cash /Pledges
Under the direction of the Director of Finance, Assistant Finance Director Tom Pepper
reviewed bank accounts to verify current cash positions and called a representative
sampling of pledgers to verify their commitments. It should be noted that from an
auditing perspective, the signed pledges make a valid receivable; to confirm commitments
would not be necessary.
Tom Pepper confirmed with the bank the current cash balances of the fundraising
committee's accounts. Balances are within $200 of those reported on the spreadsheet.
He also confirmed with the bank the current EHA cash balances appear sufficient to
support their $80,000 pledge in 1994 and most of their $40,000 pledge for 1995.
The total amount of cash pledged was $303,250. It was assumed that a certain corporate
pledge of $50,000 was good. He also assumed another pledge of $7,500 was still good
as the letter of confirmation from the donor was written in August 1994. As mentioned
above, the EHA pledge appears good based on cash balances. Of the remaining
$125,750 in pledges, several larger ones were selected totaling $105,000 and Tom Pepper
attempted to confirm the commitments by phone. Of the $105,000, he was able to verify
$80,000 but was unable to reach the appropriate parties to verify the remaining $25,000.
In all his inquiries, he found nothing that would cast doubt on either the amount or timing
of receipt of the pledges.
3
Other /In -Kind
When the Coca -Cola representative was reached, he said they have pledged $10,000 in
cash, including $5,000 toward a scoreboard with conditions and an estimated $12,500
through a cost sharing arrangement on concession sales of pop and juice. The
fundraising group has interpreted the $5,000 scoreboard contribution to be in addition to
the other $10,000. With CocaCola's interpretation, pledges are overstated by $5,000.
The $12,500 appears to be the largest unknown because it relies somewhat on the final
building design which will greatly influence the type and amount of concession sales.
Because this is a five year contribution, it would need to be looked at similar to an out
year pledge in that it would repay money borrowed to complete construction or be used
to pay construction bills at the very end of the project.
The Aagard Environmental Services' "in- kind" contribution of a roll -off container should
reduce construction costs by $4,140. The contribution of refuse hauling after completion
does not raise funds for construction but reduces operational costs. That $1,416
contribution would need to be looked at similar to an out year pledge in that it would
repay money borrowed to complete construction or be used to pay construction bills at
the very end of the project.
The Lexington Standard contribution of parking lot Tight poles will require a transfer of
funds between the site budget and the building budget but appears to be collectible.
Finally, the "sweat equity" number comes directly from the worksheet prepared by ACC.
This number will change if the scope of the project changes and certain items are
removed from the project to get the overall cost down. It will be important that these
estimates are not double counted. That is, they should reduce the bid so special care
needs to be taken so the budget and actual numbers contain the same items.
Reduced Bid
It is in the area of reduced bid savings where the potential for philosophical differences
is rather great. The fundraising group has taken the approach that any savings reduce
the required community match of $600,000 by a corresponding amount. As a result, they
are using the budget versus actual difference for design services by ACC of $34,000 as
a part of their fundraising efforts. They are also using a range of a $75,000 to $150,000,
reduced bid savings from a building contractor. The letters confirming this both seem to
side -step the bidding issue which I believe has been subsequently addressed verbally.
Opus offers a $75,000 discount on a design and construct price of $1,940,000. The Mike
Gresser letter appears to be contingent on E.C.I Building Contractors being the general
contractor which would then generate a savings of $75,000 to $150,000.
It is important to recognize that this savings will be realized only if it is reflected in final
bids. The savings only generate real money if the final bid is less than the budget for the
project as defined.
1/
Summary
Although portions of the challenge, eg. "reduced bids," require additional policy
consideration by the City Council, it seems that the campaign has been successful and
the $600,000 has been raised.
The dollar amounts listed in cash and pledges appear to be sound and nothing has been
discovered which would lead us to question the collectibility. The dollar amounts
programmed for collection after 1995 total $11,333 and would need to be replaced with
other funds to pay for construction. This will require some minor cash flow adjustments
which the City can accommodate at little cost.
The "in kind" contributions become somewhat more speculative in that they depend on
factors, such as final design, which are not yet completed. Again, the $10,708
programmed for collection in years after 1995 will require special attention.
The "reduced bids" portion of the fundraising cannot be verified in total until actual bids
are received in early 1995. Including the savings of $34,000 in the architect's bid is a
policy consideration for the City Council. With cash, pledges, in -kind and a $5,000
reduction from the CocaCola pledge, the total is $528,347. If either Opus or E.C.I. bid
the project and donate profit, an additional savings will be realized, proposed at a value
of $112,000, which is the average ofo $75,000 and $150,000, for a total contribution of
$606,347, if the $34,000 were disallowed.
The City Council, by action at the August 16 meeting, has accepted the community
campaign effort in raising the $600,000 match. In addition, the December 31, 1994 time
restriction is no longer in effect by that same direction. The revenue verification is solid
and has been reviewed by the Finance Committee Chairperson, City Councilmember
Hunter.
The only policy decision before the City Council is:
1) Is the $34,000 an allowable expense?
The final actions before the City Council are as follows:
1) Acknowledge the civic arena fundraising.
2) Authorize plans and specifications with direction relative to a base bid and
alternates.
3) Direct that if the bids exceed the budget (based on the civic arena campaign
and City contribution), the City Council will determine how the project will be
financed at the time bids are received.
4) Authorize the Fundraising Committee to collect the 1994 pledges during
September /October.
City Administrator
Attachments
TLH /vmd
Ice Arena Reductions
The following items were reduced with the initial schematic design produced in May of
1993.
• Sound System: There is no public address system for announcing or for music for public
skating, hockey games or figure skating.
• Upper Level: The upper level was stripped of the bathroom and the concession facilities.
Plumbing and electrical stubs will be provided.
• Elevator: Plans provide only for the space for a future elevator shaft and space for
mechanical equipment.
• Heating of the arena: There is no space heating of the arena; there will be infrared
heaters over the bleacher section.
• Office /concessions: There are no provisions for providing of concessions, counters and
equipment. Nor are there any furnishings in the offices. This will obviously impact
revenue production if no concessions other than vending.
• Subfloor Heating: The grid for subfloor heating will be provided but the heat exchange
equipment necessary to make it operable will be left out. This means that continued,
long -term operation of the facility for ice will not be permitted because of the probability
of incurring frost heaves (permafrost accumulation because of extended operations).
• Interior Painting: Arena portion reduced.
• Floor Material: Minor reduction of the area to receive skate tile.
Review of possible additional reductions:
The following are possible reductions to the scope of the building and the resulting impact
of those reductions.
• Hockey dasher boards: Reduce amount of 'glass' and replace with acrylic panels and
eliminate liner panel in boards. Acrylic is cheaper, but scratches easily, gets dirty and
becomes hard to see through. This also results in increased maintenance which takes a
considerable amount of time. Eventually, replacement of acrylic panels will be required.
Liner panel reduces noise and improves cleanliness, reducing operational cost.
6
• Reduce seating/reduce building width by three feet. These two are in combination. By
reducing building width, seating is reduced from 9 rows to 7 rows. Will now provide
for approximately 525 permanent seats and 125 'standing room' for a total of 650. In
addition, this option will allow for temporary seats to be brought in providing for an
additional 50 to 100 seats. Reduction of the building width by 3 feet will also reduce
the lobby by 3 feet in width, or approximately 60 square feet.
• Five hundred + seats still meet the earlier program requirements. The reduction in
seating is the most singular expensive reduction within the building. However, skate
changing area within the lobby is already at a minimum size for public skating but will
still get reduced by an additional 60 square feet.
• Youth locker roorn/team locker room. Eliminate one youth locker room: increase size
of team room. The building currently has six youth /team locker rooms. This proposal
would eliminate a youth locker room while slightly increasing the size of the adjacent
team room. This reduction will save approximately 336 square feet of space and flooring
material. An additional team room can still be added in the future.
• Roof system. Change out the Behlen roof for a long span steel joist roof. The current
roof and ceiling system provide for a metal ceiling in the arena. This continuous ceiling
does not require long term maintenance painting. The joist roof exposes all the steel
framework while lowering the distance between the ice and the underside of the exposed
joists. The exposed joists have a propensity to collect moisture in high humidity
situations. This can result in rusting and in moisture droplets forming on the ice. Painting
the steel surface can help to reduce the potential for rust but long term maintenance will
require the painting of the ceiling and underside of joist surfaces. The system also creates
a larger volume of air -which is the worst enemy of the dehumidification and ice system.
It may be less attractive than the Behlen roof system.
• Bathroom. Replace tile with burnished block. Bathrooms currently have tile on floors
and walls. The walls could be substituted with the sealed block. This block is cheaper
but still requires additional maintenance in the long run. Appearance is also an issue.
• Concrete floor vs sand floor. Current proposal provides for a concrete slab for the ice
surface. This could be replaced with a sancl floor. Sand floors eliminate the possibility
for use of the facility for other dry floor events and is more costly to operate and maintain
in the long run. The quality of the ice surface is diminished, in the opinion of some, and
more costly to operate.
• Eliminate team bathrooms and showers. Two of the team rooms have shower stall and
bathroom. These could be entirely eliminated or reduced to simply stubbing in the
plumbing fixtures. Teams rarely use the shower rooms in current facilities but there are
always occasions when out -of -town teams, and adult teams may require or find it
necessary to utilize.
• Reduce rink size to substandard size. Currently, the ice sheet is 100 x 200 size facility.
Reduction would mean reducing the size by 15' resulting in reducing the front of the
building; probably eliminating a youth locker room. This would create a substandard
size rink but would be compatible with many older style rinks currently in existence.
This option does not provide, however, an opportunity to expand the rink at a future date
and also precludes marketing opportunities with a larger sheet of ice, i.e. increased
numbers for public skating, hockey, figure skating.
• Eliminate infrared heaters over bleachers. The infrared heaters over the bleachers could
be eliminated with no heat in the building. The heaters will add some comfort for
spectators, but is this worth the cost. Heaters can always be added later.
n6larena
E r
MEMO
_ city of eagan
DATE: JULY 29, 1994
TO: TOM HEDGES, CITY ADMINISTRATOR
FROM: KEN VRAA, DIRECTOR OF PARKS & RECREATION
SUBJECT: PROJECTED CIVIC ARENA OPERATIONAL BUDGET
You had asked that I provide you with a projected budget for the Civic Arena for the first full
year's operation. Attached is that budget projection.
Again, I would like to emphatically point out that this is a projected arena budget. What is
difficult about a first year's operation is that we have not built up the clientele that will
eventually be there two or three years down the road. Ice rental in prime time will go
relatively easy. I think we can be assured that the local association will want to buy all of
those times. It is not the prime time that makes an arena budget, it is the sale of the non -
prime time and off hours that make a budget balance. The 6:00 in the mornings and the
11:00 at nights take time to build a clientele on a continuing basis. And then there is the
Learn to Skate school. I have no doubt in my mind that in three or four years we can expect
three, four and maybe even five hundred as Burnsville now has in their program. We have
projected a much lower number for the first year because, again, it takes time to build your
clients. Finally, we really don't know much about an operational schedule. I have simply
projected these revenues based on the expectation that we will be in operation from
approximately the last week in September through the end of March. How many hours are
devoted to public skating, the Learn to Skate school, possible figure skating, programs, mid-
afternoon skating as well as a definitive rate schedule; all are still projections.
To assemble these projections, I have utilized the cost figures of both Apple Valley and
Centennial ice arenas. Apple Valley Arena's expenses are considerably higher than we have
projected here for the Eagan Civic Arena. The Apple Valley facility is used significantly for
non -ice activities by the high school for pre and post ice which obviously raises their expense
for heat, lights and labor. Centennial is in operation with a summer program, consequently,
their expenses are also somewhat higher. I have tried to discount some of that for this
projected arena budget.
A word of caution: this is the first full year's operation and it is not intended to reflect the
operations for the first several months of the ice arena, that being the Fall/Winter of 1995.
Clearly, arena expenses will be higher during this time period as with preparation for the
opening of this facility with the hiring of staff, i.e. arena manager, in advance of the actual
opening. Consequently, the facility will be incurring labor cost without any revenues being
generated. Because ice arenas run so close to the break even point at any one time, these
Page -2-
early expenses need to be understood that they will not likely be caught up until after the first
year or two years of operation. For that reason, I would like to suggest that the City
investigate the feasibility of showing the arena function as an "enterprise" function rather than
an annualized budget. This would be no different than any commercial business which
opens and does not expect to turn a profit in the first year of operation. Start up expenses,
staffing, equipping and putting an organizational structure in place takes time to recover. I
believe that this would certainly be the case with this facility and an enterprise function would
allow the Council and community to take a broader perspective on how and when the
balancing of income and expenses should take place.
And, finally, it appears that this facility is well on the road to contstruction. Therefore, would
like to ensure that the City have on board by July 1, 1995 the operations manager for this
facility. Again, this assumes a late September or early October opening of the arena facility
to the public. This is a somewhat compressed time frame for an arena manager to begin the
ice scheduling and, therefore, it will be incumbent upon the City administration to develop
some early policies and make solicitations outside the community for ice sales until such time
as the arena manager can make decisions on a schedule.
I hope this budget is the beginning point for discussion with the Council so that we can
massage this into a "final" projected operational budget.
I would like to also take this opportunity to again state that nowhere in the budgeting has the
City reflected the equipment and capital needs to get this building operational. There is a
site budget and there is a building budget, but there is no equipment budget. While I have
not yet done an itemized breakdown of the items the facility will need, it is clear that a cost
projection of between $100,000 and $125,000 for this equipment should be made. This will
include the Zamboni, office equipment, cleaning supplies, ice maintenance items, goal cages
and other miscellaneous items. This figure should be projected into the arena budget in the
near future either in the operations or in the construction /site development.
I believe the preceding provides sufficient information to begin discussions. If there is
additional information you would like me to provide, I will do my best to research and find
that for you.
KV/Ik
BUDGET/ARENA.MMO
/0
Projected Arena Operations Expense
First Full Year Operations
4410 Salaries $ 63,773
4411 Accumulated Leave
4112 Over Time 2,000
4131 Temporary/Seasonal 36,000
4140 Accumulated Ret. 12,103
4150 Accumulated Ins. 11.813
Sub Total $125,689
4210 Office Supplies $ 300
4211 Printing 400
4220 Operational Supplies 9,600
4223 Building Cleaning Supplies 4,200
4224 Clothing 600
4231 Mobil Equipment Repair Parts 2,000
4235 Fuel 1,100
4240 Small Tools 500
4244 Chemicals 1.250
Sub Total $19,900
4331 Telephone $ 1,800
4350 Printing/Binding 1,500
4360 Insurance 8,000
4371 Electricity 30,000
4376 Natural Gas 14,000
4381 Equipment Repair 3,000
4410 Miscellaneous (Blade Sharpening) 2,500
4411 Conf /Schools 600
4412 Local Meeting 100
4454 Waste Removal 1.200
TOTAL:
Sub Total
$63.300*
$208,889
* (1) Does not include concessions operations.
(2) Does not include capital equipment or small equipment items necessary
to operation facility, i.e. resuifacer, cleaning equipment, office equipment,
ice maintenance.
(3) Does not include wading pool operational expense.
Income:
Projected Arena Revenues
First Full Year Operations
Ice Rental $140,000
H.S. Practice /Games 18,000
Learn to Skate 18,000
Open Skating 10,000
Skate Sharpening 4,000
Vending Concession 4,000
Dry Floor 5.000
Sub Total $199,000
Wading Pool Transfer (Labor Chargeback) $3,600
TOTAL $202,600
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