Working Session
MAYOR COUNCIL WORK SESSION
Wednesday, August 27, 2008 - - 4:30 p.m.
Council Chambers
Present:
Mayor Brown, Bjerke, Glassheim, Christensen, Kreun.
Absent:
McNamara, Gershman, Bakken.
Glassheim called the meeting to order at 4:30 p.m.
Matter of Alerus Center Master Facility Plan.
Randy Newman, Alerus Center Commission Chair, introduced and gave the group a brief background of Steve Hyman, new Executive Director of the Alerus Center.
Hyman began his presentation with a quote from Gov. Hoeven stating that the Alerus Center has become the number one complex in the Region. He stated that he has 2 goals for the facility – to become a conference leader and to create a regional entertainment destination. To accomplish these goals he believes that the Alerus must look and act like a top notch player in the industry. He shared various statistics on events with the group including that since the Canad opened have seen 155% increase in wedding bookings and 286% increase in conference bookings. New events show local ownership and utilization of the facility is growing.
Hyman continued that 2008 capital items were approved by the commission at their last meeting and are now bringing the information to Council for their approval, as was not in the initial budget approved.
Hyman provided a powerpoint presentation depicting the proposed improvements. In brief they include: exterior – east side of building: paint panel and add name, south side of building: paint, move sign to east and add UND Football by tailgating entrance and add trees, west side of building: paint and relocate name to more prominent place and light name. Exterior improvements are proposed to continue in 2009 with the addition of a conference center entrance.
Interior improvements for 2008 include: a partner wall near entrance, UND football wall which is proposed to interactive changeable video wall with some static displays mixed in, Alerus and City wall with tv’s to promo upcoming events. He stated that there was $200,000 included in the 2008 budget for capital improvements, but the full cost of the proposed items is $665,569.83, so is requesting the use of $465,569.83 from the bond proceeds to fund the improvements. Hyman continued with a review of desired improvements for 2009 totaling $4,886,000 which include exterior marquee message boards/signage, new conference center front entry, redecorate – wall covering, painting, furniture, floor coverings, way-finding signage, portable POS, foor & beverage including bars, VFD replacements, signage and advertising upgrade arena-wide, video conferencing capabilities and production, phone system, radio replacement, finish tv replacement, servers, computers, software & security enhancements, arena lighting upgrade, ice capabilities, escalator, and A&E fees.
Kreun commented that some of these are necessary replacements/repairs and some are more enhancements to the facility, but all will effect the income capability of the facility. He continued that there have been comments from some booking weddings, etc. on the colors of the facility and that they do not blend with today’s images for high end facilities. He commented that the POS stations will be fully computerized and will be great addition compared to the current units which are basically a portable cart. Kreun stated that the staff and commission feel that the cost benefit ratio for these improvements is favorable.
Newman stated that Dave Evenson, Alerus Commission Member, is also present today and can also back up that research has shown that not uncommon with facility in this type of industry to redecorate every 7 years and are beyond that now. He added that the intent was to also look at changes in the facility once the hotel component was added and in looking at the long-term plan for the facility and w/UND contract will need some improvement as move further along to meet needs for D1 facility. He stated that the Commission has reviewed these proposed capital items in detail and approved the 2008 improvements and has reviewed the 2009, but not yet approved them.
Hyman continued that all of the proposed improvements will enhance income and draw customers to the facility. He continued that we are in direct competition with Fargo - Bismarck and Fargo – Winnipeg traffic and all conferences that we have been able to attract have been impressed with the facility.
Glassheim inquired whether part of the exterior improvements include removal of the iron beams or if there is some change that could be made to them to make them more visually appealing. Hyman stated that yes can look at ways to make changes, but perhaps not remove, as probably cost more to remove them than worth to appearance. Christensen agreed that they are not visually appealing and should explore cost to remove as well as consider making changed to them. Kreun concurred with trying to make them look more like finished part of building.
Glassheim asked what the revenues for the facility have been. Hyman replied that the 2008 gross revenue should be approximately $4.1 million and for first time are looking at over $1 million in food and beverage revenue.
Glassheim inquired where the funding for the proposed improvements would come from. Christensen replied that would have to be from excess in sales tax collections from tax imposed for the bonds and that has been discussed that there is about $3 million available at present time. Glassheim asked whether we could use the funds to pay the bond off sooner if we did not decide to use it for these improvements. Schmisek replied that there is a 30 year bond and soonest we could call it would be in about 15 years, but in the meantime can use excess over present need for bond payments for capital and infrastructure improvements for the facility. He added that if no improvements were done and funds allowed to continue to accumulate would be able to pay the bond off sooner than the 30 year term, but would then need to find a way in the future to pay for improvements on the facility – perhaps with new bond. Glassheim asked whether if we use all this up at this time for improvements if more excess will build up in the future. Schmistk stated that based on current sales tax collections could assume that would be build up in the future, or Council could also decide to sell new bond in the future to fund improvements, but would need to analyze that carefully to see which is more fiscally prudent based on bond costs, etc.
Kreun stated that the intent of this presentation is to make all Council aware of the capital needs of the facility and to begin the conversation of how to best meet those needs and to let Schmisek and staff work toward finding the best way to plan for those future needs.
Christensen stated that in 2003 the Alerus Center borrowed $2 million form another fund and completed pay back this year and at end of 1009 could have $3.4 million in the fund and do not want to see this become our old Civic Center and to keep in mind that with UND move to D1 may need more room on the south end of the building for expansion.
Bjerke inquired whether UND has signed a long-term lease with Alerus Center yet. Hyman stated that have completed negotiations and both Athletic Director and Alerus have approved the contract, now waiting for Administration and UND President to sign off and is for a 10 year lease, don’t expect any problems, that at this time the lease only pertains to UND football but will also pursue other events with UND but under a separate lease agreement. Bjerke responded that had read that NDSU paid for some of upgrades needed at the Fargodome based on move to D1 and hopes that we would also pursue that with UND.
Bjerke inquired as to the number of parking spaces available. Hyman stated that presently have 4,000, but with growth of the conference center will see a future need for more. Bjerke stated would like to know whether we could bond for the proposed 2009 improvements and could sell and then pay for $4.6 million.
Christensen stated that in regards to D1 issues, believes that have always conveyed to UND that want to work with them and get long-term lease and should explore whether they can help pay for any expenses directly related to that change and would be help to get funding for another source that us. Christensen continued that 2009 improvements are exciting and open possibilities and have new partner with Canad and hope before look at that have plan for increased and coordinated marketing of the facility. Kreun stated that the marketing dollars with Canad have been leveraged greatly and they have been a great partner to work with and have worked well with other hotels in town and CVB. He stated that have shown how they can bring business to town that benefits others, as often conferences need more hotel rooms than the Canad can supply so does help others. He added that have also combined their sales staff so people have one place to call to get info on both.
Evenson commented that stated that he has been on Commission for number of years and have always been very focused on success for the facility and want to recognize the excitement that Hyman has brought to the facility and the community and the partnerships that have come into play with the Canad, CVB, etc.
Duquette summarized that it would be Council’s wish to see the 2008 improvements brought forward for discussion at an upcoming COW meeting. Kreun stated that once the Commission has reviewed and approved the 2009 improvements will bring that back to the Council again for information and approval. Christensen requested that Lyn Endorf at Dorsey & Whitney be contacted to brief the Finance Committee on the use of the bond proceeds.
Newman commented that at one time had some morale problem with staff, but Hyman has enhanced the staff and brought the morale of all up, he has contributed to bringing in events to the facility and worked on both the football lease and creation of a signature holiday event to begin this year and wants to recognize the Commission is very pleased with the direction that the Alerus Events Center is moving.
Meeting adjourned.
Respectfully submitted,
Sherie Lundmark
Administrative Specialist Senior