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I ~. I I I I I I I .. I I I I I I I f' I ARDEN HILLS CITY COUNCIL - SEPTEMBER 9. 1996 7 Councilmember Malone stated he has been reading documentation for this project but finds it difficult to follow due to conflicting statements. He noted the total project cost is about $9 million with $2 million being contributed from four participants as up-front money. He inquired whether there will be four or five participants. Mr. Kreidler advised there are five including the Minnesota Amateur Sports Commission which is donating the land and Mighty Ducks funds of $500,000, but not a down payment. Councilmember Malone stated he understands the request for guarantee of hours but one document talked about operating costs, financing, capital costs, etc. He noted that each participant is to contribute a $500,000 down payment but Mr. Kreidler has indicated they only have $250,000. Mr. Kreidler explained they initially proposed to raise $500,000 but are now asking Ramsey County to make that contribution which will be the down payment. Then, the Hockey Associations will place its $250,000 in a cash escrow so it can be used in case of a shortfall. Mr. Kreidler stated if Ramsey County does not agree to make a contribution, the Hockey Associations will still try to contribute, perhaps via a loan. Councilmember Malone noted the anticipated total debt service is about $600,000 per year and the Hockey Associations will be responsible for 25%, for a total exposure of approximately $150,000 per year. However, the escrow count is only for $250,000 and would not cover two years of debt service. Mr. Kreidler explained they currently have $250,000 and will need to know what the City's comfort level is. If they need to increase that amount, they would do so. Councilmember Malone inquired regarding the annual cash flow. Mr. Kreidler explained they operate as a nonprofit organization and charge participants only for the cost to operate (ice time, jerseys, etc.) which are charged back on a pro rata basis. Mr. Fritsinger advised the issues of the escrow amount and covering debt service have been debated and discussed over the last six to seven weeks, in an effort to determine how the escrow account should be set up. Discussion has occurred that, perhaps, a ceiling amount should be considered which could be reduced once the project begins to cash flow. He reviewed a number of options discussed on how to deal with the escrow, ceiling, draw, etc. Councilmember Malone eXplained he is trying to get a "feel" for dollars and exposure. He inquired regarding the scenario if operating costs are greater than anticipated. Mr. Fritsinger explained the Hockey Association/Cities are responsible for debt service and to guarantee the hours. The Minnesota Amateur Spots Commission (MASC) would have the responsibility to determine whether they need to increase the cost per hour of ice time. Mr. Fritsinger advised the Hockey Associations would, in no way, have to incur additional costs for operating costs, only if not meeting ice time. It was noted a board of directors will be established with one member from each arena and city so the MASC cannot, on its own, make a change in the cost of ice hours without agreement by the board.