On Thursday evening the City Council met to consider financing of a new Sleepy Eye Event Center.
On Thursday evening the City Council met to consider financing of a new Sleepy Eye Event Center. City Manager Mark Kober presented information about a tentative plan for the city to construct an event center near the motel at the east end of town. Several interested people attended the meeting, including members of the EDA, chamber board, hospital board and public utility commission.
Kober reported that the motel will be available for purchase on Sept. 18, when the foreclosure redemption period ends. He said there are some local parties interested in purchasing it and they are also amenable to having the event center located there. He pointed out that in order for the city to build there the land must be free.
Kober then asked the council and those in attendance to consider how to pay for the event center. Based on an early estimate of $3.5 million to build it, he outlined the cost of borrowing the funds. He said that debt service at four percent, for 20 years, would amount to an annual payment of $249,000 thus bringing the total cost of the project to $5 million.
Added to an estimated $100,000 annual operating cost for the center, that would mean annual costs of $349,000; a figure Kober said represented thirty percent of the city’s tax income. His conclusion was that borrowing money to pay for the event center would translate to an increase in property tax for the citizens of Sleepy Eye.
Kober then discussed the option of paying cash for the event center. He said that four major city departments carry large cash reserves. The general fund, sewer fund, public utility and hospital all earn interest outside of their operations and hold reserve funds as they prepare for future needs.
The total in the city reserve funds is $15.675 million, reported Kober. He pointed out that the $3.5 million cost of the event center amounts to just over twenty percent of the reserve funds. “If we could build the event center without raising taxes and only $100,000 in operating costs, it would be marvelous,” Kober said.
He went on to say that the annual operating costs might be offset somewhat by the fact that the city would own the liquor concession at an event center.
Hospital Board chairperson Gordon Osmonson expressed concern about drawing down the hospital’s reserves. Councilor Richard Zinniel said he’d like to see the various commissions agree on a split of reserve funds.
The council members would like to hear from their constituents about the funding proposal. A few options were discussed including a possible ballot question, or some type of survey.
While Kober and the council had originally hoped to begin construction this fall, it now appears that discussion of funding will mean a few months of study. The only action taken at Thursday’s special meeting was council consensus to ask Oleson + Hobbie, Architects to prepare a proposal for their design services to be presented at the Sept. 9 regular council meeting.