City Council Meeting Date: May 7, 2024
To: Mayor and City Council
From: Ben Martig, City Administrator
David E. Bennett, Public Works Director/City Engineer
Title
Update on Ice Arena Partnership, Tax Impacts and Timeline.
Body
Action Requested:
The Northfield City Council is to discuss Ice Arena Partnership, Tax Impacts and Timeline.
Summary Report:
At the March 12, 2024 City Council meeting staff gave an update on the Ice Arena Partnership along with updated project options and costs. The City contracted with JLG Architects and RJM Construction to provide updated costs on a new ice arena, along with remodeling/expanding the existing Ice Arena. The options and cost are below in the Financial impact section.
A couple items that need further exploration from the Council was related to the Economic Impact of an Ice Arena and if there is more capacity for donations beyond the $2 Million indicated by the Northfield Hockey Association (NHA).
Economic Impact
The City leveraged two reports by the University of Minnesota Extension, the first report was “Economic Contributions of Attendees of East Grand Forks Ice Arena Youth Events” in 2022 and the “Economic Impact of the Hermantown Amateur Hockey Association on Duluth, Hermantown, and Proctor, Minnesota” in 2020. The reports look at number of visitors, visitor spending, accommodations, and influence of visitor destination. Both reports quantify direct and indirect spending.
The City reviewed the ice related events at the Northfield Ice Arena and approximated economic impact. The economic impact is shown in the table below.
Direct Spending Impact is the initial activity of spending by people attending youth skating events.
Indirect spending impact “is the summation of changes in the local economy that occur due to spending for inputs (goods and services) by the industry or industries directly impacted. For instance, if employment in a manufacturing plant increases by 100 jobs, this implies a corresponding increase in output by the plant. As the plant increases output, it must also purchase more inputs, such as electricity, steel, and equipment. As the plant increases its purchase of these items, its suppliers must also increase production, and so forth. As these ripples move through the economy, they can be captured and measured. Ripples related to the purchase of goods and services are indirect impacts.” Indirect impacts are those associated with ice arena events.
Partnerships
Northfield School District
The Northfield School Board reviewed a draft letter of support/commitment for a New Ice Arena at the April 22, 2024 Board Meeting. The School District would contribute $250,000 for a 20-year lease (Note: about $200K would go toward new debt for new Ice Arena, and $50K for annual ice fees). The School Board will take official action on May 13, 2024.
City of Dundas
The City of Dundas Council also reviewed the proposed funding partnership at their April 22, 2024 Council Work Session and shared that the existing arena has reached the end of its useful life and general support for the funding partnership and how it is split. The shared split with Dundas and Northfield is based on Estimated Market Values of each City (Northfield 87.9%, Dundas 12.1%). Dundas Council will act on a funding partnership at the May 28, 2024 City Council meeting.
Northfield Hockey Association
The NHA has indicated a fundraising effort to reach $2 Million and also the donation of 7 acres of land that has a land value of $375,000 per Rice County. Any fundraising beyond the $2 Million, the NHA has indicated they would like to have it go towards the Optional upgrades in Option 2 that were removed to bring the project cost down for a New Ice Arena to $20.9 Million. For example, they have indicated adding the Precast Concrete Stadium Seating back into the project.
City of Northfield
The City of Northfield would contribute the proceeds from the sale of the existing Ice Arena. Current terms are a sale price of $1,225,000 and the remainder less the partnerships above. Ehlers have estimated the bond figures and levy amount and a summary is below for a $20.9 Million New Ice Arena.
Next Steps
A project time is attached, after the partners act on their commitments to the project, the Northfield City Council will be asked to act on the partnership at the June 4, 2024 Council Meeting.
Alternative Options:
Renovate and expand existing Ice Arena or get out of the ice business and close the Ice Arena.
Financial Impacts:
Three different options were reviewed, and a summary of the costs are below. The costs below are for 2025 construction.
Option 1 - New ~52,000 SF Ice Arena
$25,166,480 Construction Cost
$2,887,486 Soft Cost
$28,053,966 Project Cost
Option 2 - New ~45,800 SF Ice Arena
$18,843,254 Construction Cost
$2,053,244 Soft Costs
$20,896,498 Project Cost
Optional Upgrades - Could come from additional donations or in the future
$382,951 Floor Dryland (small space 1,350 SF)
$1,307,785 Upper Level Dryland (5,300 SF)
$2,361,439 Precast Concrete Stadium Seating
$24,948,673 Project Total with all Options
Option 3 - Existing Ice Arena Improvements - Renovate/Expand
$ 4,545,998 Remodel/Refrigeration System
$10,528,983 New Addition
$15,074,981 Project Cost
Tentative Timelines:
• Attached