St. Michael cites ice arena repair in setting 2.99% levy increase

Reviews capital equipment needs

The St. Michael City Council set a preliminary 2014 levy increase of 2.99 percent, part of which will be budgeted to cover additional ice arena expenses.

The council also reviewed the 20-year capital equipment plan for things like a new $500,000 fire engine, and took action on other issues.



Mayor Jerry Zachman and councilors Kevin Kasel, Joe Marx, Nadine Schoen and Chris Schumm were provided with a detailed report of condensation issues at the STMA Ice Arena. The arena is jointly owned and operated by the cities of St. Michael and Albertville, and the St. Michael-Albertville School District.

Arena board members Kasel and Schumm reviewed discussion from the recent arena board meeting and said the board concluded that the existing dehumidification system and insulation for the building is extremely under designed. They said the board concluded that the best approach would be to install a new dehumidification system and remove the fiberglass insulation and use spray foam and a thermal barrier.

The total estimated project cost would be $545,000. Kasel said this problem needs to be fixed soon, and the council discussed how financing would work. It was suggested could bond for the project and be paid back by Albertville and/or the school district over the length of the bond.

The council discussed the proposed preliminary levy for 2014, and noting the maintenance repair needed for the ice arena. Kasel suggested levying 2.99 percent to cover additional ice arena expenses and to increase funding for the capital project funds.

Kasel said he would rather keep levy increases around 2 to 3 percent each year, instead of levying 1 percent now and needing to raise it to 5 percent or more  in future years to pay for replacement equipment costs.

Councilor Schoen was hesitant to levy for more than what was needed and would rather keep the increase as minimal as possible, but the council did agree the capital equipment/building funds are all underfunded. It was noted the levy increase would be used to cover the cost of the arena repair and to fund equipment replacement costs.

The council ended up voting 4-1, Schoen opposed, to set the preliminary levy at 2.99 percent. The preliminary budget will be discussed and approved at the Sept. 10 council meeting.




In other news, city administrator Steve Bot reviewed the 20-year capital equipment plan, noting that nearly every piece of city equipment would need to be replaced in the next 20 years.

In reviewing the 10-year budget projections, Bot said the fire equipment fund should be fairly stable, but that a new fire engine would cost at least $500,000 and would probably need to be replaced by 2025. He said the amount transferred into the fund should be increased to build up enough reserves for a future engine replacement.

Bot next reviewed the streets and parks plan, saying $500,000 per year is needed to keep up with replacement/maintenance demands. He said the average cost to replace all the equipment during the next 20 years is $358,000 per year for streets and $98,650 per year for parks. In addition, he said that starting in 2025 park play structures would likely need replacement at $50,000 per park.

Bot did note that the equipment plan assumes replacements would be new, but that the city has been fortunate to find used equipment at discounted rates for a lot of recent purchases and replacements.

Councilor Kevin Kasel said the levy could be increased by 3 percent each year to properly fund the capital needs so the city does not need to borrow money for future purchases. Furthermore, it was noted that if the city continues to receive local government aid from the state, the money should be placed in capital funds to cover replacement costs.

Bot lastly reviewed the capital building fund, which is used for building maintenance, roof replacements and future cold storage facility for public works, and others. He said there is currently only enough money in the fund to pay for existing assessment debt obligations, and that money would need to be placed into the fund for future maintenance and building needs.

The council thanked staff for the report and agreed these funds are underfunded and the city needs to plan for depreciation and replacement costs.

In other action, the council:

SET a joint meeting with the city of Albertville and St. Michael-Albertville School District for Monday, Sept. 30, at 6 p.m. at Albertville City Hall.

APPROVED a scope of services agreement with MFRA engineers for the 2014 wastewater treatment plant biosolids improvement plan, and directed staff to proceed with the project design and plan.