PRECM 06-27-1973 - Laserfiche WebLink

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PARK BOARD MEETING June 27, 1973 Meeting was called to order at 8:_l0 p.m. Board .members. present: Cook, Dahl, Gunderman, Hagemeyer and Smith. Weissman appeared at 8:~FO and. Council Representative Eagon at 9e30. Board members absents Sherlock. Others present: Tom Warner and Orland Narr, representing Recreation Systems Incorporated and Robert M, Wicklund, Director of Parks and Recreation. Ice Arena Presentation Mr. TrTarner and Mr. Narr of Recreation Systems Incorporated explained the process to the Board by which a community can secure an ice facility through private investment. Mr. Warner explained the financing of the process and stated that it had three (3} crucial factors: 1. No real estate taxes. 2. Municipal financing rates. 3. Private operation with incentives. The nonprofit corporation which sells $700,000 in bonds9 $550,000 of these are "A" bonds which are underwritten by an investment house and sold to the public. The remaining .$150,000 are "B" bonds which are sold first to local investors. Recreation Systems Incorporated then constructs the arena under contract to the nonprofit corporation. 500,000 is used for construction costs, $200,000 for finance costs. 700,000 is considered the the maximum indebtedness an arena can incur and still produce a profit. The "A" bonds are amortized in the normal fashion. The "B" bonds however, are not paid off until the maturity date. Payment sequence is interest on the "A" bonds, principal on the "A" bonds and principal and interest on the "B" bonds. The nonprofit corporation then leases the land and building to the Village for tax purposes. If the bonds default, the arena automatically reverts to the nonprofit corporation. This provides the municipality frcam being involved in a losing proposition. The Village then contracts with Recreation Systems Incorporated to run the arena. The Village can take over operation of the arena by paying up the bonds at any time. If the arena fails, the Village has the right but not the obligation to purchase the facility. Dahl asked what intensity of use is necessary to make an arena profitable . Mr. Warner replied that he did not know. A. feasibility study would be required to determine what levels of use would be necessary.