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030909 CC WS MinCITY OF SHOREWOOD CITE' COUNCIL WORK SESSION MONDAY, MARL 9, 2009 MINUTES 1. CONVENE CITY COUNCIL WORK SESSION 5735 COUNTRY CLUB ROAD SOUTHSHO CENTER 6:00 P.M. Mayor Liz6e called the meeting to order at 6:05 P.M. A. Roll Call Present. Mayor Liz6e; Councilmembers Bailey, Turgeon, Woodruff and Zerby; Administrator Heck; Planning Director Nielsen; and Engineer Landini Absent: None B. Review Agenda Turgeon moved, Woodruff seconded, approving the agenda as presented. Motion passed 510. 2. SOUTHSHORE CENTER Administrator Heck explained in mid-February 2009 the Friends of the Southshore Center dissolved. The Friends had been responsible for managing the Center's operations prior to dissolving. This placed that responsibility on the five owners of the facility which are the Cities of Deephaven, Excelsior, Greenwood, Shorewood and Tonka Bay (the Cities). The Cities have individually been discussing what to do with the facility. During its February 23, 2009, meeting Council discussed taking a two track approach. Council wanted Staff to determine how to market the facility for sale. Council also wanted to keep the Center operational during March to give the cities time to discuss what they wanted to do with the facility in the long term. Heck then explained the Lake Minnetonka Communications Commission (LMCC) had been approached about possibly purchasing the facility; the LMCC is considering purchasing its current facility. He met with Sally Koenecke (LMCC Executive Director), an architect for the LMCC and a contractor to discuss if the facility could be renovated to accommodate the operational needs of the LMCC. The LMCC has submitted a "terms" sheet for the purchase of the facility to the Cities. Heck then explained the Deephaven Council wants to market and sell the Center. The Excelsior Council wants to have the Center continue to operate as a Community Center. The Greenwood Council's preference is to have the Center continue to operate as a Community Center. The Tonka Bay Council is open to possibility of selling the Center, but only after a few of its questions have been answered (e.g., what is the market value of the building and how will it be determined?). He has received over twelve phone calls from residents expressing their desire to have the Center continue to operate as a Community Center. Four of the five cities would have to agree to selling the facility, and the Shorewood Council would have to determine whether or not it wants to exercise the Shorewood Option in the Cooperative Agreement (i.e., this option gives Shorewood the first right of refusal for acquiring the facility). Per the Cooperative Agreement a fair market value would have to be determined. Unfortunately, the Agreement does not explain what process would be used to determine fair market value. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES March 9, 2009 Page 2 of 6 Heck recommended the Center continue to operate as a Community Center for the remainder of 2009. During that time the Cities should look for a partner or partners to manage and operate the facility, provide programming, and increase the use of the facility. If there is no success in finding a suitable partner(s) and/or the Cities can not reach agreement on amendments to the Cooperative Agreement during 2009, then the facility should be put up for sale. Heck stated he had provided the Cities' Councils with information about booked rentals for 2009; names of organizations or people who have rented over the last 12-month period; actual expense and revenue information for 2008; projected expense and revenue information for 2009 - 2012 (both with and without including the costs to find capital reserves for the long-term care and maintenance of the facility). If the Cities could agree to some reasonable arrangement with South Shore Senior Partners (SSSP) to operate the facility through 2009, he projected the Cities would have to contribute an approximate total of $3,600 for Center operations for 2009 based on past rental histories. The use of the Center had not been actively marketed over the last few years. Therefore, he thought if the Cites actively marketed the use of the Center the number of rentals could be increased. Cotmcihnember Turgeon stated she thought the Greenwood Council did specify a few caveats relating to managing the operations of the Center, yet Administrator Heck had not discussed them. It is her understanding that if a suitable management partner could not be found the Greenwood Council is willing to sell the facility. Administrator Heck explained in a letter drafted earlier in the day Greenwood Mayor Kind stated the agreement between the Friends and SSSP is not valid agreement. Mayor Kind also stated the Greenwood City Council hopes the Center can remain viable as a Community and Senior Center. The letter did not specify any caveats. He had spoken with the Greenwood City Administrator earlier in the day who indicated the Greenwood Council wanted there to be a management arrangement with another party to manage the operations of the Center. Minnetonka Community Education (MCE) was mentioned as a possibility. He noted he had not spoken with MCE about the possibility of managing the Center, but he had spoken with MCE about expanded programming and that would be contingent on space availability. NICE prefers not to pay rent as it doesn't do so for other facilities. He stated he received an email from Best & Flanagan LLP (who does some financial work on behalf of the Minnetonka School District) who indicated it was going to talk to the District about whether or not the District had any interest in using the Center. Councilmember Turgeon stated approximately 1 - 1.5 years ago MCE indicated they wanted the Cities to pay it $50,000 - $60,000 to manage the Center. She then stated she thought the Friends had entered into an agreement with MCE to provide expanded programming, but she has not seen a copy of that agreement. Administrator Heck stated he was not aware of any discussions related to that, and he has not had the opportunity to talk with MCE. Councilmember Zerby questioned if Council would be interested in building a Community Center today if the Southshore Center did not exist. He stated the agreements the Cities and the Friends entered into when the Center was built are not as comprehensive as they should have been to address the current circumstances. He asked the Councilmembers what they thought the City should do for the senior residents in the South Lake area. He then asked is a Community Center something the City should provide as an amenity to them in some way or fashion, or is it something the City should provide only if there is no ongoing cost to do so. He went on to ask if the City was willing to invest in senior programs in some manner without it being a breakeven situation. CITY GIB SI- OREW OD WORK SESSION MEETING MINUTES Match 9, 2009 Page 3 of 6 Mayor Liz6e stated Council has to decide what the City's philosophy should be with regard to having a Community Center. She asked if Council thought the Center is an asset to the City and its residents. She noted the facility is paid for. She commented the Center serves the South Lake community as a whole, and that it has become known as the Southshore Senior Center because the seniors have been the most active in using the facility. She stated she attended the special Greenwood Council meeting earlier in the day when that Council discussed this topic, and she understood the Council to be interested in the continuing to operate the Center as a Community Center. She asked if Council viewed the Center as an asset which could be considered another park and recreation amenity for seniors and the greater community. The Center was managed well for a long time, but lately it has fallen on hard times and the use of it has not been marketed aggressively. She suggested Council focus on discussing its philosophy regarding a Community Center this evening. She noted there is a meeting of the Southshore Center working group the next day. Councihnember Turgeon stated from her vantage point philosophy ties to budget. She commented that Administrator Heck's revenue and expense projections did not factor in the cost to manage the Center. Mayor Liz6e stated she was confident the other councils understood there would be some cost to have someone manage the Center. Mayor Liz6e stated she emphatically wanted Council to discuss philosophy this evening. She wanted it decided prior to the meeting of the Southshore Center working group meeting the next day. She did not think all the operating issues would be resolved this evening. Councilmember Bailey stated it is not inappropriate for the City to have some sort of Community Center provided it can be done in a cost effective manner. If it required an open ended financial commitment there would likely be apprehension to do so. He expressed concern other options had not been considered for providing opportunities for seniors to gather, and other options would have a more predictable financial impact. He thought there were other facilities that could be pursued for conducting senior activities. The Cities built the Center and they also established a partnership with an organization to manage and fund the operations of the Center. That organization has since dissolved. Although there were ultimately flaws with that arrangement, it did work for a significant amount of time. The original intent was for the Cities to build a facility another organization would operate. He thought it prudent for Council to discuss if it wants to be in the landlord business if the prior approach to operating the Center will not work. He stated the 15-year old building is likely to have serious structural issues with it in the next 10 - 20 years. He recommended the Cities at least research alternatives which would not involve them being in the landlord business. Councihnember Zerby stated he was not aware of other facilities that could be used for activities currently held in the Center. He views the Community Center as a recreational amenity. He stated he did not think the sports fields in City parks pay for themselves. He thought a developer would pay $2 million to acquire Freeman Park for a development. He thought the City needed to provide for life cycle recreation; recreation starting with children playing in the sand box to seniors playing bingo. Councilmember Turgeon asked Councilmember Zerby if the City should own the Center by itself if the other Cities pulled out. Zerby responded that because the City has at least 50 percent of the South Lake area population he would consider that. Zerby stated the City's ball fields are used by individuals residing outside of the City. Turgeon stated she understood Zerby to say he would be willing to have the City pay the operational and long-term maintenance costs to keep the Center operational for one user group. Zerby stated over 60 people or organizations have used the Center in the last 12 months. Mayor Liz6e stated the Center is located in the City, the Cities entered into a Cooperative Agreement when they built the Center and the City has the first right of refirsal if the Cities decide to sell the Center. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES March 9, 2009 Page 4 of 6 Councilmember Woodruff stated the Cities decided to invest $622,000 to build the Center in 1996 and entered into an agreement with the Friends to manage and operate the Center and provide programming services at no cost to the Cities. That worked for a number of years until Federal, State and other agencies grant funding disappeared. Late 2006 the City contributed $6,500 toward operating expenses of the Center; the City had never envisioned it would have that expense. In 2007 the City was asked to contribute $14,000 towards expenses, but chose to contribute only $7,500. During 2008 budget discussions the Friends asked the City to contribute more than $21,000 in 2008 towards expenses. The other Cities contributed a combined amount that was approximately the same. The finds for expenses were in addition to the funds generated by the Friends through fundraising efforts, rentals, etc. Woodruff then stated Administrator Heck's projection for 2009 is actually $4,200 and not $3,600. If a contribution to a capital reserve fund were included in the projections the 2009 cost to the Cities will be significantly higher. On February 11, 2009, the Friends submitted a letter to the Cities that it had dissolved and had transferred its assets to SSSP. During the February 23, 2009, Council meeting he requested the Cities be provided with a business plan for operating the Center and lie stated he supported the City being involved in operating the Center during March while the Cities decided on the long-term future of the Center. SSSP has indicated it wants to rent the Center for 8.5 hours a day Monday - Friday for a monthly cost of $600. He has no clue who belongs to SSSP, what SSSP's financial situation is, what SSSP is going to use the Center for, or how SSSP is going to finance whatever it's going to do. He questioned how he could trust SSSP was going to do anything. He stated, from his vantage point, there is no plan for delivering services to seniors if the Center remains open. NICE has not made a commitment to providing services to the seniors. Woodruff went on to state the Friends had a $59,000 miscellaneous expense in 2008 and he understood that a substantial amount of that expense was for programming. A similar amount is not included in the projections for 2009 - 2012. He questioned how that expense will be funded in 2009. He expressed he was totally disenchanted with this situation. Woodruff explained in August 2008 the Friends informed the Cities that it wanted to amend its current lease agreement with the Cities. From August 2008 through December 2008 the Cities squabbled about how the lease should be amended. The Cities then began squabbling about how to amend the Cooperative Agreement between the Cities. The only purpose of the Agreement was to get the building built. The agreement does not specify anything about how the Cities would work together to operate the Center should the need arise. The City volunteered to run the Center during March 2009, and there is no guarantee that the City will be reimbursed by the Cities for 50 percent of the costs to do so. The Cities have not been able to agree on amendments to the Agreement, nor have they agreed to an interim agreement for operating the Center on the short term. He expressed lie was absolutely disappointed. SSSP has no business Plan. The Cities cannot agree on what to do going forward and he does not think that is going to change. He stated this is a nonsensical situation. 111 1996, building the Center and entering into an agreement with the Friends to manage and operate the Center was a good idea and it was a good idea for a while, but over the last 3 - 5 years it has become less and less of a good idea to the point that it is now dysfunctional. He was unsure if it ever could work and he has not yet been provided with a plan showing how it could work. He again expressed he was very, very disappointed. Councilmember Zerby stated this is the fifth regular Council meeting he has attended as a Councilmember. Therefore, he has not had an opportunity to have heard discussion about many of the questions asked this evening. He commented crafting the joint powers agreement for police services took more than one year; it is difficult to reach agreement among cities. He also commented things do changed. He questioned how the facility could ever be replaced if it was sold. He thought the current problems could be resolved if given a fair chance. He recommended Council decide on a program that CITY OF SHORE WOOD WORK SESSION MEETING MINUTES March 9, 2049 Page 5 of 6 will work for the City's residents. He expressed confidence that a suitable partner can be found to operate the Center. Mayor Lizee stated she thought the other Cities likely had similar questions to some of those asked this evening. The dissolution of the Friends organization and the creation of the SSSP organization have resulted in some unanswered questions. For example, who belongs to SSSP and does SSSP have a business plan for use of the Center? The Cities need their questions answered. Councilmember Turgeon stated the cook at the Center makes $40 per hour. People were charged $3 per lunch. Therefore, the Friends must have subsidized part of that cost. Mayor Lizee stated the Friends had stated it was subsidizing lunch because it wanted to improve the menu offerings. Turgeon stated the Friends Board had discussed the Friends attempt to recoup the cost for lunch, but chose not to. Mayor Lizee again asked the Councilmembers if they thought the Center is an asset for the community, and if they were willing to continue the program and find a suitable management partner to help make the Center successful. When the building was built the Cities all agreed they did not want to manage the facility, and the Cities have reaffirmed that during discussions over the last 2 years. She asked Council if it was willing to pursue finding a suitable partner to manage the Center. Councilmember Turgeon stated the Cities have been discussing the Center's operations, management of and funding since 2006. Therefore, she is willing to put the facility up for sale at this time. There are other facilities in the community that can be used for providing services to seniors; Mount Calvary and St. Johns both have large facilities the City could rent, and the seniors could play bridge in City Hall on Thursdays. Councilmember Bailey stated the Cities should take a two track approach where they would consider the sale of the facility at the same time they look for a management partner who can produce a viable business plan for operating the Center. He recommended the Cities aggressively pursue the serious offer from the LMCC, and if the offer proves attractive to the Cities and a viable alternative is not found for operating and managing the Center then he would be willing to sell the building. Councilmember Zerby stated lie does not want to sell the building. He thought some of this current situation has been preordained. He stated during a July 24, 2006, Council work session Councilmember Turgeon expressed interest in getting rid of the Center (per the minutes of that meeting). During that same meeting Turgeon stated the Long Lake Community Center had recently been closed. From his vantage point there appears to have been opposition to operating the Center for some time. The way the joint powers agreement between the Cities is crafted makes it unfavorable for the Cities to support it; it is not ad valorem based. The Center is a unique amenity the community has, and it would be very difficult to replace. Turgeon stated she took offense with Zerby's comments because she has put in significant number of hours at the Center, and from her vantage point she has not done anything to keep the Center from functioning. Councihnember Woodruff stated during a December 2008 Council meeting the City Attorney (at that time) explained the Cities purposely did not want to enter into a joint powers agreement for building the Center, and chose to enter into a Cooperative Agreement. He commented the Cooperative Agreement was a "half-way agreement" which only addressed construction of the facility. He stated the Cities have been trying to amend the Cooperative Agreement since late 2008 to address the operations of the Center. His read on what has happened with the other Cities' councils is they are saying "if they" would take care of trying to figure out how to make this work, then "they" could go ahead and do that and "we'll" go along with making a contribution. He expressed "there ain't no they" and as far as he is concerned Shorewood is not the "they". He stated he is willing to have the Center operate until the end of March. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES March 9, 2009 Rage 6 of 6 Mayor Liz6e asked Director Nielsen what the property zoning is of the land the Center is on, what allowed the building to be constructed on the property, who owns the parking lot, what the allowable uses for the property are, and what process would have to be followed if the building were to be sold. She stated there would have to be a commercial appraisal done of the facility before it could be sold. Nielsen explained the property is zoned R-2A, Single and Two Family Residential. Public buildings and government regulated buildings are allowed by conditional use permit within residential districts. The Center and the LMCC both fall into those uses. The Center owns an extremely tiny parcel of property; in effect a line was drawn around the building and canopy and the City deeded that parcel over. The Center has very little of its own parking. If another use came in it would have to go through the conditional use permit process which includes holding a public hearing. The City would have to enter into some type of long-term parking arrangement or lease. In response to a question from Councilmember Zerby, Director Nielsen explained the property does have frontage on County Road 19. Currently the access is off of Country Club Road over the City owned property. Tina Brandhorst 27225 Smithtown Road, stated she has been a resident of the City for over 30 years. She commented she usually does not get involved in these types of things, and she has never been on the Friends Board. She stated she has volunteered at the Center on a very limited basis, and she is reaching the age where she would like to become more involved. She expressed disappointment that she may not have that opportunity. She stated it would be very unfortunate to lose the Center as a resource; once it's gone it's gone. If a future Council determined a Community Center would be of value there would be no place to construct it. There are parks and recreation facilities for children and youth. She had not heard Council discuss the costs for providing ice rinks and ball parks. The building is already bought and paid for. It's only a matter of how it will be utilized. The argument should not be how it can be sold; it should be how it can be utilized. She thought it would be a really big mistake to sell the building. 3. ADJOURN Turgeon moved, Woodruff seconded, Adjourning the City Council Work Session Meeting of March 9, 2009, at 7:00 P.M. Motion passed 510. RESPECTFULLY SUBMITTED, Christine Freeman, Recorder ATTEST: r f. r~ Christine Liz6e, Mayor r/Clerk