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MMCDC willing to keep running Community Center

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Detroit Lakes, 56501
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Detroit Lakes Minnesota 511 Washington Avenue 56501

The Detroit Lakes City Council's finance committee met last week to discuss a proposal from Holmes Center, Inc. for long-term management of the Detroit Lakes Community and Cultural Center.

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After the DLCCC was built, largely with donated funds and state grant money, Holmes Center, Inc. formed to manage the facility. The group signed a contract with the city to manage DLCCC for five years. That contract is up Dec. 15 of this year.

With a notification requirement of 180 days prior to the contract's due date, Homes Center, Inc. -- a branch of the Midwest Minnesota Community Development Corp. -- has expressed to the city its intent to renew the contract for another five years.

While it's Holmes Center, Inc.'s decision whether it wants to manage the facility -- which consists of recruiting members, maintaining the building, making repairs and improvements, etc. -- the city council has to vote to accept the contract.

Holmes Center, Inc. board member Arlen Kangas said in the past four and a half years, Holmes Center, Inc. has spent $600,000 in repairs and improvements on the facility, raised through membership revenues.

Another bullet on the proposal was paying off the debt.

When the DLCCC was built, a portion of the building was funded with $4 million in Qualified Zone Academy Bonds (QZAB). In 2014, those bonds mature and Holmes Center, Inc. is responsible for paying for the $3.9 million.

The city has expressed concern that Holmes Center, Inc. won't be able to come up with the balloon payment by 2014. Holmes Center, Inc. has come up with a solution.

Kangas said Midwest Minnesota Community Development Corporation -- of which he is president -- will grant $225,000 to Holmes Center, Inc. to fund the QZAB reserves. He said it should be an adequate amount to bring the total to $3.9 million in 2014.

City Finance Officer Lou Guzek agreed the $225,000 should be adequate.

Kangas said Holmes Center, Inc. is also asking the city to "rearrange" the initial $1.5 million debt Holmes Center Inc. owes the city.

When the DLCCC was built, the city granted a $1.5 million loan to Holmes Center, Inc. The group has paid off some of that loan.

The city would approve an equity interest in Holmes Center, Inc., Guzek said. So, the liability on the books "would go away," and any profits the DLCCC made would go to the city.

Guzek said the finance committee discussed wanting Holmes Center, Inc. to have some money in a building reserve fund in case of repairs that could arise.

"They're kind of cash poor right now," he said.

Kangas said with the new proposal, he feels Holmes Center, Inc. will continue to operate with success.

"Holmes donated a wonderful facility to the city," he said. And having Holmes Center, Inc. form and manage the facility has also been another great donation to the city, he added.

Guzek said he feels the proposal is favorable.

Holmes Center Inc. also plans to change the structure of its board of directors.

Instead of four appointed by MMCDC, two by the city and one by the Detroit Lakes School District, it would change to two appointed by MMCDC, two by the city, one by the school district, and two that the board itself would appoint.

The contract and funding changes were not voted on at the meeting. The contract will possibly be discussed more at the next finance meeting on April 11.

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