BE studies paying off one building, expanding another
Despite the fact that Blue Earth, like many other cities, has had to make budget cutbacks in recent years, the City Council has started discussions on two large building expenditures.
That’s because the two buildings in question house income-generating businesses. The expenditures would not be made with either taxpayer dollars or Local Government Aid from the state, but from profits from the businesses.
At last Monday night’s meeting, the council heard a request from Michele Hall, director of the Faribault County Fitness Center.
“We have had the opportunity to do well the last several years,” Hall tells the council. “The issue is that we are running out of space.”
Hall says memberships are up in numbers, which translates to heavier use of the facilities.
“It has caused some crowded conditions,” she says. “We really need to expand the weight room and locker room.”
She says a subcommittee of the fitness center board is studying possible ways to expand.
“We are asking permission to have an architect provide us with plans to see what we should do,” Hall says. “Whether it is to expand internally in our current building, or to add on to it.”
Although the council did not take a formal vote on the question, Mayor Rob Hammond says the general concensus was to move forward with the request for a proposal.
Hall says there is no guess on what an expansion would cost. However, she did point out that the center has made a profit the last three years.
“Is there room to build an addition?” Councilman Allan Aukes asks.
“Well, the city owns the fairgrounds (where the fitness center is located),” Hall responds. “We haveplenty of room to expand the building.”
Councilman John Gartzke cautioned Hall and the council not to under-build.
“If we move forward on this we want it to be large enough that we don’t have to come back and do it again,” he says.
The council also received good news from their largest business enterprise, the city’s liquor store.
City Administrator Kathy Bailey reported the business showed a profit of $99,114 in 2010.
“It had a profit of $68,000 in 2008,” she says. “There was a reported loss of $18,000 in 2009, but that was because we transferred $89,000 to the general fund to make up for LGA cuts.”
She says the city would have no problem paying off what is still owed on the building.
“January 2012 is coming right up, and that is the first date we can pay off the bond,” she says.
The city would need to make a payment of $455,000 at that time. There is cash on hand of $496,640 in the liquor store fund, Bailey says.
“Paying it off early would save the city $103,000 in interest,” she adds. “It has been a good money maker for us. We will be able to remove some debt from our debt service.”
Councilman Glenn Gaylord says it was always the council’s intent to pay off the building as soon as possible.
“It would be nice to have it paid off,” Gaylord says. “Then we can put the profit back into the community.”
Mayor Hammond added that some major expenses could be coming as the building ages.
“We may have to do things such as replace the roof, or the coolers,” he says.
Bailey agreed, saying the city should have a long term cash policy, to know how much in reserve funds the city needs to keep on hand.