01-0330R

RESOLUTION AUTHORIZING REIMBURSEMENT OF $20,000 TO ARROWHEAD YOUTH SOCCER ASSOCIATION FOR PARTIAL COSTS OF SOD INSTALLED AT THE JEAN DULUTH SOCCER FIELD COMPLEX AND AMENDMENT TO OUTSTANDING NOTE.

BY COUNCILOR HOGG:

        WHEREAS, the city and Arrowhead Youth Soccer Association (AYSA) have previously recognized that youth soccer in Duluth has experienced explosive growth in recent years and both parties have worked together to address the city's lack of "regulation" soccer fields; and

        WHEREAS, the city and AYSA have previously entered into an agreement in which the city and AYSA agreed to work toward the development and eventual completion of a soccer field complex consisting of five regulation soccer fields (the complex) located on city property at the Jean Duluth and Riley Roads; and

        WHEREAS, in 1997 AYSA paid in excess of $80,000 to have the complex designed and substantially constructed, except for the grass playing surface; and

        WHEREAS, in order to complete the field in 1997 for play in 1998, the city agreed to loan $55,000 to AYSA at an annual rate of interest of four percent as evidenced by a note (the note), to install sod in the fall of 1997; and

        WHEREAS, since then the AYSA have made interest only payments on the loan; and

        WHEREAS, for 2001, the city has budgeted $20,000 in its capital improvement plan to be used to complete perimeter fencing at the complex; and

        WHEREAS, the AYSA was able to secure a grant for the fencing from the Duluth Rotary which eliminated the need for the city to pay for said fencing; and

        WHEREAS, the council believes that it is important to the community to assist with providing recreational infrastructure facilities for youth and adult sports in Duluth, including soccer facilities.

        RESOLVED, that the Duluth City Council hereby authorizes the appropriate city officials to re-allocate $20,000 from the 2001 capital improvement plan budget (0450-015-2001-C114) from paying for fencing for the complex to reducing the outstanding balance on the aforesaid AYSA note, as partial reimbursement for the costs of sod at the complex and to modify the note to reflect said reduction in outstanding principal amount.

        FURTHER RESOLVED, that said officials are hereby authorized to further modify the terms of the note to to be deemed to have been non-interest bearing from its date of inception and applying all past AYSA interest payments to principal reduction.

        FURTHER RESOLVED, that said city officials are hereby authorized to further modify the note, which after principal reduction as hereinbefore provided for, is deemed to be in the unpaid principal amount of $30,000, to allow payment thereof over a term of five years with payments of $6,000 per year.



STATEMENT OF PURPOSE:  This resolution authorizes the proper City officials to apply $20,000 budgeted in the 2001 capital improvement budget for soccer field improvements to the Arrowhead Youth Soccer Association's ("AYSA") outstanding loan balance as a partial city contribution for sod installation at the Jean Duluth soccer complex.

In 1997, the City and AYSA agreed to work toward the development of a new five field soccer complex on land the City was acquiring from the University of Minnesota located at the Jean Duluth and Riley Road intersection. The AYSA agreed to finance all necessary design and construction work at the fields, amounting to over $80,000, at its own expense. The field construction took place in the spring and summer of 1997. When it was realized that if sod could be installed in the fall of 1997, youth soccer play could begin in 1998 rather than the planned for 1999, the City agreed to loan the money to AYSA for the sod installation.

The City's 1999 Capital Improvement Plan budgeted $20,000 in each year of 2000 and 2001 to pay for perimeter fencing. However, the AYSA was able to secure a $40,000 grant from Duluth Rotarians to be used for the fencing need. In 2000, the budgeted $20,000 was used to pay for the portions of the Spirit Mountain soccer field construction.

The administration proposes to apply the other $20,000, budgeted for the other half of the fencing in 2001, to AYSA as a partial reimbursement for the sod installation. It further would propose to modify the terms of the note to non-interest bearing note, retroactive to its inception. Therefore, all AYSA payment made to date, about $5,000, would be applied to principal. All future payments will be applied to principal. The AYSA and City are prepared to enter into a loan payoff installment arrangement as attached.

The AYSA has also had to pay off a loan related the original $80,000 field construction costs which was paid in full in the fall of 2000. That is the reason that AYSA has only been able to make interest only payments on its sod loan. AYSA's ability to make debt service payments is derived via a surcharge added to youth soccer registration fees. However, the AYSA's youth soccer program has many current expenses and needs and both are expected to grow in the future; but the organization has been and will continue to be paying off debt related to construct the Jean Duluth fields. The application of the $20,000 and modification of the loan terms to non-interest bearing will not only enable the AYSA to expedite an earlier sod loan payoff but will also allow it to more effectively address its programmatic needs, now and in the future.