DISCLAIMER

06-0785R AS AMENDED


RESOLUTION APPROVING CONTRACT WITH SALVATION ARMY FOR DEVELOPMENT AND USE OF A RECREATIONAL FACILITY AT WHEELER FIELD IN THE AMOUNT OF $7,200,000 FROM THE COMMUNITY INVESTMENT TRUST FUND AND NOT TO EXCEED $300,000 FROM THE DULUTH PUBLIC FACILITY AND PROGRAM FUND.

BY COUNCILOR STAUBER:

     RESOLVED, that proper city officials are authorized to execute and implement an agreement, in substantially the same form and having substantially the same terms and conditions as that agreement on file with the city clerk as Public Document No. ____________, between the city of Duluth and Salvation Army, a not for profit corporation under the laws of the state of Illinois, for the construction and use of a recreational facility at Wheeler Field Park in the amount of $7,200,000 from the Community Investment Trust Fund 256, Agency 030, Object 5490, and net proceeds from charitable gambling not to exceed $300,000 from Duluth Public Facility and Program Fund 259, Agency 400, Object 5439.


STATEMENT OF PURPOSE:  This resolution requires the affirmative vote of seven members for passage. This resolution authorizes the city to enter into an agreement for use of the proposed Kroc Center. The basis structure is that the city will sell five acres of park land with existing improvements to Salvation Army (SA) for about $377,000. SA will build a building that has a church, meeting areas, classrooms, office space, running track, 25 yard, 8 lane swimming pool, leisure pool and water slide, 12,200 square foot gym which can accommodate one high school size basketball court and will have floor markings for two recreational size basketball courts, volleyball and tennis.


The city will transfer about $7.2 million from the community investment trust fund into an endowment fund, and up to $300,000 over ten years from the pull tab revenues. The earnings generated by that fund will be used to operate the recreation facility.


In return for its investment, the city will be allowed to use the gym and/or the pool for up to 750 total hours each year. For example, in one year the city could use 375 pool hours and 375 gym hours. (For your calculating convenience, 4% of $7.2 million = $288,000.) The payment buys space usage only, not program costs. The city will provide staff for its activities at the building. SA will operate its religious mission in the same building. Participants in city programs will not be required to participate in any religious activities.


Some existing or planned city facilities will be displaced by the new construction, including four tennis courts, six bocce ball courts, Wheeler fieldhouse, 72 parking spaces, a playground, proposed skate park site and part of the Grand Avenue access driveway.


If any of these facilities are to be replaced, it will be with city funds. SA is not contributing to that. For example, the city agrees to spend up to $150,000 of the money received in the sale of the land to construct a parking lot which can be used by the public and will also be used to satisfy SA’s parking requirement. Estimates of replacement costs vary. The most recent staff estimate is about $375,000 cost to the city to restore lost facilities.


If the facility ceases operation during the first 20 years, the city can rescind the agreement and seek restitution of some of its money. The amount would be determined at the time. There is no provision for restitution after twenty years (one twentieth of $7.2 million is $360,000, which is 5%).


After negotiations were completed, the city hired independent counsel to review, analyze, and recommend with regard to legal compliance of the contract. Several recommendations were made. They involved land transfer issues and church-state issues. By separate memo, we will report the extent to which the recommendations were followed.