[Mpls] Nearly a Million ($900, 000.00) MInneapolis Park Board Settles - Who Pays?

[Shawne FitzGerald]

The MPRB bought the 201 Building at Ft. Snelling Neiman intending to 
build a practice ice facility for the Minnesota Wild hockey team.  MPRB 
staff was negotiating with MN Wild at the time - the purchase was made 
before the deal was finalized.  The vision was that the facility would 
generate revenue for the MPRB.  The cost of the building was $850,000.  
The MPRB hired Miller Dunwiddie to estimate the cost to rehab the 
building to an ice facility - that estimate was about $3.5 million.  The 
MPRB moved a road and built a very nice parking lot, wired for lots of 
lights, adjacent to the building.  The deal with the MN Wild did not 
happen - and the MPRB investment at the 201 building was over $1 
million.  The source of funds was bonds.

Next, the MPRB granted The Fort LLC a 30 year lease to develop and 
operate an indoor/outdoor skatepark at the 201 Building.  There was no 
rfp for the project - no bids were taken.   (The agreement also 
contained a no-bid contract to construct two skateparks elsewhere in the 
system.)   This project was also supposed to make money for the MPRB.   
The Fort LLC abandoned the project leaving the contractors unpaid.  The 
contractors filed liens against parkland and filed a lawsuit - this 
$900,000 is the proposed settlement of that lawsuit.   The MPRB needs to 
sell this site for about $2 million just to break even!   The 
alternative is to spend millions of dollars to rehab the 201 Building - 
a building that seems to serve no MPRB need - so selling at a loss to 
raise money to settle the lawsuit is an option worth considering.

Comm. Young suggests that, worst case, the $900,000 will be paid out of 
the MPRB self insurance fund.  At the end of 2004, the balance of the 
self insurance fund was ($3,506,366).  A negative number.  I humbly 
suggest that the self insurance funds have to come from some source - 
and property taxes remains the MPRB's largest and most reliable source 
of income.

The MPRB is on the hook for the $900,000 because it failed to require a 
performance and payment bond or any other surety from the developer.  
Requiring contract bonds is standard within government; MPRB staff have 
routinely done this for years.  In a sense, requiring contract bonds is 
another element of community review - in this case, a specialized 
financial review, for developers demonstrate that they have the 
requisite financing, credit, suppliers, and experience to complete a 
project.  Probably, The Fort LLC, a newly formed company with no 
development, construction, or skatepark operating experience and with no 
assets, would have been unable to secure contract bonds for the 
project.  Personally, I believe that one or more folks at the MPRB did 
this developer a big favor and now, taxpayers are going to pay for that 
favor.  Will those responsible be held accountable?     


I've read almost all of the MPRB Board meeting minutes back through the 
4th quarter of 2001.  There is no mention of citizen advisory committees 
formed to review either the ice facility or skatepark facility at Ft. 
Snelling Neiman.  I can't recall a public hearing for either use.

The MN Wild do practice at the MPRB Parade Ice Complex.  In 2004, when 
there was a hockey strike, the Parade Ice Complex  lost $230,193.

Other Ft. Snelling Neiman Facts:

- When the Ft. Snelling athletic complex began, initial project costs 
were $6,000,000 (ca. 2000).  The project costs escalated to $14 million 
in 2001 and $14.9 million in 2005. 

- Taxpayers are paying for Ft. Snelling Neiman.  Debt service on the $14 
million bonds sold for the project is just over a million annually.  
Additionally, the park operates at a loss - this is projected to be 
$40,000-$45,000 in 2006.  The annual cost of Ft. Snelling Neiman will be 
about $1.1 million.  (The MPRB annual operating budget is about $50 
million.)

-  A $1 surcharge on golf rounds doesn't generate enough money to pay 
for Ft. Snelling Neiman.  In 2004, about 280,000 rounds of golf were 
played at MPRB courses.

-  In 2001 when the MPRB requested the $8 million in additional bonds 
for Ft. Snelling, the staff recommendation said "At this point, our 
bonding request will be for enterprise fund supported bonding of $6 
million dollars.  An additional $2 million in bonding supported by 
external funding (such as the Minnesota Wild rent) will be finalized 
over the next 12 weeks."   The park operating enterprise fund consists 
of "golf courses, refectories, ice arenas, sports complexes and 
self-supporting recreational activities."  In 2004, these activities 
generated a net profit of $334,959. 

- The Ft. Snelling Neiman project was unusual in that it was the first 
time the MPRB decided to finance a new project with bonds independent of 
the CLIC process.  (I think this is the right way to state this - David 
Brauer can correct me.)  So, another mechanism of community review was 
lost.  The next time the MPRB tried the same strategy, borrowing for the 
new Headquarters Building, the Mayor vetoed the request with City 
Council support. 

-  Initially, the MPRB sold $6 million in bonds (through the City) for 
the athletic complex, the fields, at Ft. Snelling.  Early on, the  MPRB 
diverted the majority of funds, $4.1 million, to acquire land adjacent 
to the Ft. Snelling athletic fields that was leased to a new private 
corporation for 30 years.  The private corporation built an indoor 
tennis facility on the parkland.  At the end of 30 years, the 
corporation has pledged to donate the facility to the MPRB.  To be fair, 
this is a non-profit corporation.  Again, there is no record of a 
citizen's advisory committee formed to consider whether or not the MPRB 
needed to borrow and spend $4.1 million on a $9 million tennis facility 
located outside of the city in return for getting a 30 year old building 
and use of it's own land 30 years down the line.

Another problem with the tennis facility is duplication of services.  
The MPRB has had a longtime relationship with another tennis non-profit, 
Inner City Tennis, based at 40th and Nicollet.   Did the MPRB need a 2nd 
facility, another tennis/mentoring program?  If yes, why are there two 
southside and none northside or eastside?  These nonprofits use not only 
MPRB resources but they compete against each other for grants and with 
the current MPRB strategy  to seek more grants, we need to ask how many 
grants will be given for youth athletics?  For what sports or other 
recreational activities? 

- In 1998, Supt. Fisher estimated that quality athletic complexes could 
be built at Bryn Mawr, Ft. Snelling, and Northeast Park  for $18 
million.  The MPRB's goals were 1) to increase soccer fields, 2) to 
provide quality fields,  and 3) to provide more rec opportunities 
especially for middle school students to divert them from gangs.  
Although the field improvements at Ft. Snelling cost about $7 million, 
total project cost is $14.9 million. 

Shawne FitzGerald
Powderhorn



Annie Young wrote:

>Actually higher taxes is not the answer to this one.  The Park Board has
>until Nov. 1, 2006 to settle this claim.  In the meantime, we will be trying
>to sell the building or come up with the revenue from the building in one
>way or another that would get us this $900,000.  By about next June we will
>be looking at all our options which as a last resort includes paying out of
>our self-insurance fund by the Nov. 1 deadline.
>Annie Young
>Citywide Park Commissioner
>  
>