FAIRMONT– A joint work session surrounding the proposed community center was held Wednesday evening inside council chambers in Fairmont. It was the third such meeting to take place on the topic between the multiple stakeholders.

The topics of this particular meeting was financing, ownership, maintenance and discussion. The first topic proved to be cumbersome as new market tax credit, bonds, additional local option sales tax and other sources of private funding were discussed.

While the primary stakeholders involved are the Fairmont City Council, Fairmont Area Community Center Foundation, Fairmont Hockey Association and the Fairmont Community Center Advisory Board, several others were involved in Wednesday’s meeting, including bond council with Taft Law Mary Ipple and Daniel Burns, Jessica Green, a financial advisor with Northland Securities, as well as Peter Berrie, a lawyer/consultant employed by the Foundation to speak about new market tax credit.

Burns spoke about a memo he and Ipple had put together to give a 30,000 ft. overview on the financing of the proposed community center.

“This starts back when the city sought special legislation, sales tax authority, up to $15 million issuing sales tax bonds to provide funding for various things including recreational amenities, trails and a community center,” Burns said, referring to the local option sales tax that began in 2017.

He went on to say since then there’s been money set aside for purposes of an ice arena and there’s already been some money dedicated and spent on design. The memo detailed money remaining to contribute to the project moving forward.

The topic of ownership was also discussed. The land that the community center is proposed to be built on is owned by Mayo Clinic Health System. Burns said that the land would be acquired and then there would be a lease-lease-back structure between the Foundation and the city of Fairmont. Ultimately he said the YMCA would be the operator of the facility.

“To finance the construction of the community center… the Foundation is proposing a new market tax credit structure which will ultimately result in a net benefit of roughly $5 million to the Foundation,” Burns said.

He said there will be a bond issuance on remaining amount from local option sales tax and those funds together are proposed to be granted to the foundation to help fund construction of the facility.

As it’s being proposed as a grant instead of a loan to be repaid, there will be other terms down the road, which Burns spoke briefly about.

Next, Green spoke more about the bond process. First she talked about the local option sales tax of $15 million that the city has accrued and the money the city council has committed to the ice mechanicals.

She said there’s about $12.6 million left but that the city has been collecting sales tax revenue and to date there’s $4.7 million. Once committed funds are taken out, available cash remaining equals $2.8 million

“What we’re assuming is that bonds will be issued to get us back up to that $12.6 million that is being shown as available for the project. It’s a bit of a moving target here as the city anticipates incurring additional expenses,” Green said.

Green also spoke some about the difference between taxable and tax-exempt bonds because if the city put proceeds into pooled funds, the bonds will need to be issued on a taxable basis. She said they have taken the net proceeds and sized the bonds according to what they anticipate for cost of issuance.

Council Member Michele Miller asked about the contract between the construction company on the project, Kraus Anderson, and the architect, JLG.

“If we’re granting this money, shouldn’t we be going out for RFPs (Request for Proposals) on design and architect. Because it’s not the city that’s designing it anymore… it’s actually the Foundation. Should we be going out for new RFPs?” Miller asked.

She added that if the city is giving out the money as a grant, there may be other groups who request similar amounts from the city for projects.

Ipple said, “The grant isn’t going to these entities that are providing the design service. The grant is going to the Foundation because we’re now doing new market tax credit financing. If we are not doing new market tax credit financing and the city is financing this project… those contracts will remain with the city.”

She said the Foundation is strongly proposing a tax credit structure, which means the contracts need to be assigned to the Foundation.

Switching gears, Council Member Jay Maynard said he’s heard concerns in the community about maintenance operation expenses. He said as long as it can be guaranteed that the responsibility won’t fall on the city, it would resolve a lot of concerns. The memo states that those responsibilities would fall on the Foundation.

Some questions about design were also asked. Miller referred back to a piece in the memo under design which said that the city will enter into an agreement with the Foundation, providing certain guidelines for design. She asked when the council can do that.

“I know that you (Foundation) were in conversations with JLG the other day and the YMCA is asking for more space for fitness so when do we as city council have the opportunity to put our two cents on design?” Miller asked.

Reynolds said that design meetings are ongoing. She said she anticipates another meeting with the architect soon.

“If they go back to schematic design, then there’s increased costs,” Reynolds said.

Council Member Randy Lubenow asked whether the council should be updated more regularly on the other meetings about the community center that are taking place.

Fred Krahmer, a member of the Foundation, said he wasn’t at the most recent meeting but that the Foundation is committed to making sure the community center will operate as an effective YMCA. He said he appreciated the city council’s concerns about whether child watch should be added, as was talked about at the last joint work session, but at this point it cannot be redesigned.

Reynolds shared some recommendations that were provided at the last design meeting and said that a second story was talked about, as were the number of studio rooms required to have a successful fitness area.

Miller said she’s not asking for the facility to be redesigned. Rather, she said she thinks the fitness area should remain at 5,000 sq. ft. and that some of it should be used for a child watch area.

“We have two fitness centers in town… I do not think we need to compete. I think we need to look at the fitness part and make sure that it’s not more than 5,000 sq. ft., we have an area for children and we need to look at the pool again because I think we’re limiting ourselves,” Miller said.

Council Member Britney Kawecki invited Lakeview Methodist Health Care Center’s Board Member, Brandon Edmundson, to speak about Building Blocks Learning Center and Child Care, which is housed inside Lakeview. Lakeview has invested over $1 million in a new child care center but is still seeking funds to finish the space, which would add about 100 more child care spots.

“To me it’s a better use of community money to finish out what we have first and if that’s full and we still don’t meet the need, we go from there,” Edmundson said.

Miller said she’s not necessarily talking about a daycare center, but more of a child watch for before or after school and that she doesn’t want it to compete with Lakeview.

Maynard said that an earlier work session it was said that the fitness facility was 5,000 sq. ft. but that conception drawings now show it as nearly 10,000 sq. ft.

Reynolds said that schematic designs should come back out for council approval and that a work session on schematic design is planned for later in the summer.

Lubenow said he hopes to get an update and copy of the most current design before August because he’s getting regular calls about it.

Edmundson, who is also on the Community Center Advisory Board, asked a question about the memo which detailed the land and how a portion of it will be deeded by Mayo to the Foundation and another part will be deeded to the city for a later addition of an ice arena.

“When would we expect Mayo to deed the second portion to the city?” Edmundson asked. He also asked about the length of the lease and whether it’s been discussed yet.

Ipple said the land would be deeded all at once to the Foundation, which would lease the divided land to the city, which would in turn lease half back to the Foundation. She said the lease would be around for the term of the bond but that any more specific terms are yet to be established.

“We need the Foundation to operate this facility for the life of the bond because we are giving you (the city) the bond proceeds of the sales tax. We need the land relating to the ice arena so we can construct our facility which will happen in the second part of the financing of this, assuming we get additional sales tax authority or bonding money for the ice arena,” Ipple said.

Reynolds added that they’re working with the architects on whether it will be two buildings with a little space between them or a zero lot line construction.

While the meeting was a work session and no votes were to be taken, Reynolds asked whether the city council and Foundation were in agreement with the structure as laid out in the memo. If so, it would allow all parties to move forward with their work.

Krahmer expressed satisfaction with the agreement. Council Members Lubenow, Maynard and Kawecki also said they were happy with it.

A resolution on the matter will likely come to the May 22 city council meeting for council approval.