Community center compromise
Depending on whether or not a proposed contract is accepted, some changes are in store for the Detroit Lakes Community and Cultural Center.
Holmes Center Inc.'s contract for running the community center is up Dec. 15. The organization must agree six months before that date on a new contract with the city. Officials from the city and Holmes Center Inc. have held several meetings on the issue, including Monday's special finance meeting.
Holmes Center Inc.'s proposal includes renewing a five-year contract to maintain the community center; changing the board member make-up; having Midwest Minnesota Community Development Corporation contribute $225,000 to square up the QZAB debt retirement account; and open its meetings to the public. Holmes is also asking for relief from its $1.4 million debt to the Detroit Lakes Public Utilities Commission.
With the Holmes Center Inc.'s change in board members, MMCDC would no longer have control of the board. Instead, the city, MMCDC and the Holmes Center Inc. board will all appoint two directors, and the school district would appoint one director. The board has already begun action to make these changes.
The city is proposing the utilities commission convert the $1.4 million loan to a non-interest bearing note and would then levy to cover the payments. The city already levies $50,000 for community center operations. When the utilities commission imposed a new electric rate schedule, it was counting on the $50,000 payment per year.
"We thought at least we'd be getting the interest (on the $1.4 million loan)," Utilities Supervisor Curt Punt said.
The $50,000 would take care of the interest that public utilities expected to receive.
"We recognize (the community center) as an important asset to the city," Punt said, as to why the utilities commission is willing to work with Holmes Center Inc. and the city.
The city will also continue to provide the community center a matching $55,000 grant from the liquor fund.
The proposals would basically relieve Holmes Center Inc. of debt, and the utilities commission has agreed to this, city administrator Rich Grabow said.
Alderman Leonard Heltemes said he's concerned about the tax levy side of the proposal.
"$100,000, as far as I'm concerned, is too much. I could support $75,000 at the most," he said.
He said the city already has a lot coming up in the near future with the Highway 10 project and other obligations like sewer and water to Long Lake.
"We gotta be careful," he said on levying too much.
He added that only levying $75,000 would give Holmes Center Inc. an incentive to raise more money.
Alderman James Hannon said he agreed with Heltemes that the city should focus on infrastructure instead.
"I think we're letting them off too soon and too easy," Alderman Ron Zeman said.
He said citizens are already paying for increased electric rates and gas increases, etc., and there was no reason they should pay for the community center debt as well.
Grabow said if the city doesn't enter into an agreement with someone (if not Holmes Center Inc.) to run the community center, the city will have to take over running it, or it will close. The city already owns most of the building, except a portion the school district owns, and Holmes Center Inc. is running the building.
Alderman Bruce Imholte suggested Holmes Center Inc. look into other areas for funding, like at the state or federal level.
"Local sales tax is a great way to pay this off," he added.
Zeman suggested the option of levying to pay for the community center should be on the November ballot for voters to decide. He also said Holmes Center Inc. should be doing more fund-raising and raising prices to pay off some of the debt.
Stu Omberg, CFO of Holmes, said the board has compared its rates to nearly a dozen other community centers, and the Detroit Lakes facility has the highest rates of all of them.
He said it's difficult to fund-raise, as well, because when they ask people to donate money to support a building owned by the city that is in debt to the city, citizens feel the city should pay for it.
"In order to accomplish our goals, we need to raise double that next year," Omberg said of the funds raised in 2005.
"Cash flow is still extremely difficult for the center at this point," he said.
Going over the financials and fund-raising profits, the finance committee asked Omberg if Holmes Center Inc. could raise the money to support the new proposal.
"It's a goal," he replied. "It's lofty, but yes, it's realistic or the board wouldn't have approved it. Is it realistic? Yes."
"We have a tremendous facility, and we'd be remiss if it fell into disrepair," Alderman Jim Anderson said.
He said it attracts families and businesses to the Detroit Lakes area, and that he's in favor of the proposal.
"It's a positive effect on the city and a tremendous asset to the city," Alderman Matt Brenk agreed.
Imholte said he, too, supports the proposal, but only if Holmes Center Inc. changes its name to Detroit Lakes Community and Cultural Center Inc. because of the money the city has put into the building and operation, and also for name recognition.
"After it's a done deal," he said, "I'll insist on that."
Omberg said he would bring the suggestion back to the Holmes Center Inc. board.
A majority of the finance committee agreed to propose to the city council a five-year contract with Holmes Center Inc., levy for $100,000, to re-visit the $55,000 match from the liquor fund each year and to request the name change of Holmes Center Inc.
If the Holmes Center Inc. board decides against the city's proposal, it doesn't have to accept the position of caring for the community center and won't have to throw in the $225,000 for the QZAB debt.
"It's our option, not yours," Omberg said.