FAIRMONT– The Fairmont City Council on Monday heard from Fairmont Area Community Center Foundation (FACC) member, John Kasper, who provided a comprehensive update on the project and also spoke to the delays and financial stress a lawsuit has had on it.

Kasper shared that FACC was formed in September 2021 to fulfill the city resolution made in 2019 to raise $6 million in public pledges, hire the YMCA to operate the facility and to to coordinate the lease agreement.

“In addition, in May of 2023, the city asked if we could help oversee and coordinate the design and construction of the project because the bandwidth of the city at that time was stretched,” Kasper said.

He said they have currently raised $8.3 million in pledges, which he noted is $2.3 million more than the Foundation was originally tasked with raising.

“There always the questions of ‘how much money do you have in the bank…’ but when you talk about capital fundraising, one of the very important levers that you use is stretching donations over time and that allows us to get some of these significant donors to give more money over time and not requiring them to give all of their money at once,” Kasper explained.

He added that the families who have pledged so far can be trusted to give the money promised when it’s time to do so.

Kasper also identified the consulting agreement with the YMCA as a key accomplishment. The YMCA signed the agreement in March of 2022.

“We have a full operating agreement all drafted and ready to go and once the lawsuit is complete, we’re ready to sign that and move forward,” Kasper said, mentioning a lawsuit against the city which was brought forth by the Fairmont Taxpayers Coalition for Government Transparency.

“We really need to give a nod of thanks and appreciation to the YMCA for their patience over the many years and through the ups and downs that have gone on and on through this process. They remain very committed,” Kasper said.

He said that the Foundation sat down with the organization this summer to talk about how the YMCA can get programs started, after several prior failed attempts.

“Through their due diligence they went out and approached the Schmeeckle Foundation and were able to get a grant issued to them and starting in 2025 they will start some senior programming which we’re really excited about,” Kasper said.

He also touched on the completed building designs from November 2023, which he said are the right size to meet the budget and operational efficiencies of the building.

“It’s smartly designed to meet the needs of the budget… it isn’t an over-design or under-design,” Kasper said.

He also shared a few items that are still a work in progress, such as the land donation. Kasper said the design documents are currently with the Mayo Clinic representative and that they should be signed yet this week.

“The operation agreement… I know Matt (Skaret) is meeting this week with the legal folks and I know the city has been driving that,” Kasper said, noting that there are some logistical blanks due to the current lawsuit.

Moving to some more financial pieces, Kasper shared some current projected expenses and revenues. As it stands, the construction of the building is expected to cost about $22.6 million but with contracting costs, soft costs and a contingency, the total amount is projected to be about $27.4 million. Kasper noted there is also $500,000 set aside for an operating endowment.

“That brings our total funds needed for the project to about $27.9 million,” Kasper said.

Going back to revenues, Kasper shared there’s $12.6 million raised in local option sales tax, which he pointed out is down $1.4 million from the original $14 million set aside. The money in question was previously pulled by the city council and put toward the purchase of the new ice compressors.

“We upped the pledges from $6 million up to $8.3 million and we have new market tax credits coming in at $3.7 million which leaves us a $3.3 million gap we’re short right now,” Kasper said.

In closing, Kasper said they needed to recognize the ongoing lawsuit and the impact it’s had on the project.

“They’ve set out to do these things and they’ve accomplished it. They’ve delayed the project, they’ve increased the cost. We’ve had a very difficult time getting any more money out of donors because of the impact it’s had. There’s been significant confusion in the community and clearly it’s wasted taxpayer’s dollars and it’s wasted your time,” Kasper said to the council and present administration.

He also said that the lawsuit has stalled the new market tax credit process and that funds were recently released in Minnesota but Fairmont was blocked from it because of the lawsuit.

“There’s been significant impact because of the lawsuit,” Kasper said.

However, he said the Foundation has been reflecting on the current status of the project and has come to a conclusion.

“The Foundation is all in. We’re committed to this project. We’re not walking away,” Kasper said.

Likewise, he said the anchor donors are locked in and committed to the project as well.

After he was done presenting information the council was allowed to ask questions. Council Member Wayne Hasek asked whether any donors have backed out and Kasper said no one that he is aware of has backed out.

Hasek also asked who was paying for the lawsuit and Kasper said that question should be directed toward the city as the Foundation is not involved in the lawsuit. City Administrator Matt Skaret said the city had the deductible but the League of Minnesota Cities was covering all other expenses.

“So it’s costing taxpayers another 10 grand?” Hasek asked.

There was no immediate response and when Hasek asked again, several people answered “yes.”

Council Member Randy Lubenow asked whether the land the community center will be built on would be under ownership of the city of Fairmont.

The question was answered by Mike Edman, an attorney in town who has involvement with the Foundation. Edman said he has been the contact person for the Foundation with Mayo involving the transfer of the land title.

“It’s a very interesting tract of land… the plan is that Mayo will be deeding title of the land to the Foundation. The Foundation will own the land and there is a very complex lease-user agreement that the Foundation will enter into with the city,” Edman said.

He added that the city has its own bond counsel on that matter.

Lubenow said he is aware that some community members believe that if the community center fails, the land will go to the Foundation for free and taxpayer money will be wasted.

“If people have that understanding, they’re mistaken. That’s not what this is set up to do and it’s never been set up to do,” Edman said.

Kawecki had also asked for reassurance that the construction of the facility was not being paid for with funds from resident’s property taxes and Kasper confirmed that property taxes were not being used to fund the project.

In closing, Kasper asked the council and the leadership in the council to talk about the positives.

“We get trapped so much in the rumors and the lies and the misinformation that it brings our community down and I just plead with you all, as leaders in this community, to talk about the positives. Not just with this project, but about every project,” Kasper said.