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Fitness center expansion cost at $625K

By Staff | Apr 21, 2013

The Faribault County Fitness Center is bursting at the seams.

And, the center’s board of directors wants to do something about it.

At Monday’s Blue Earth City Council meeting, they proposed constructing a $625,000 addition onto the current building.

Despite its name, the city of Blue Earth owns and operates the facility which is located at the Faribault County Fairgrounds land which is also owned by the city.

“We are at over 300 memberships,” fitness center director Michele Hall says. “Our weight room and locker rooms are just too small to accommodate all the equipment and people.”

Plus, the weights/exercise room is located upstairs, a hardship for some older members.

The new addition would be constructed on the east side of the current building and would include an expanded weights and exercise equipment area, larger locker rooms and a relocated office.

It is proposed to be 71 feet by 70 feet, and built of pre-fab concrete panels.

“The current locker rooms would become an exercise classroom,” Hall says. “Currently we have to use the tennis court as an exercise room.”

Some council members were concerned about not expanding the tennis court area.

“We are going to spend $625,000 and not add on to the south and build another tennis court?” Councilman Glenn Gaylord asked. “I thought that was to be part of the plan.”

Fitness center board member David Lein said that it once was the plan.

“The current tennis court is not used that often, only a couple times a week,” he says. “Plus, the cost of adding on for another court is too high because of the taller ceiling area needed.” He says the energy and maintenance costs would also be much higher.

City Administrator Kathy Bailey explained the financial portion of the proposed expansion.

“We have about $150,000 in the fitness center account right now,” she says. “That is cash in the bank we could use for the project.”

The center has been showing a profit for the past five years, Bailey says.

In 2008 it had a profit of $8,107 and in 2009 it was just $4,285.

“Those years we were still paying off an internal loan for equipment, and paying back the fair board for their original investment,” Bailey explains as the reason for the low numbers.

Then in 2010 the net profit was $23,904, in 2011 it bumped up to $42,522.

Last year, 2012, the profit number looks to be coming in at $71,170. Part of the reason for the high number is that no new equipment was purchased in 2012.

“We have three options for paying off the cost of the addition,” Bailey says. “We could do it with an internal loan (the city ‘lending’ the money from reserves) or doing an abatement bond or an enterprise revenue bond.”

In all three cases, the plan would be to pay off the cost with the profits of the center each year. The estimated annual payment needed is estimated to be at least $36,000 per year and could be closer to $40,000.

“We show annual revenues at the center of $146,000,” Bailey says. “If we have a higher payment, we would need to be increasing memberships.”

Councilman Gaylord and Councilman Dan Brod both pointed out that no matter which of the three funding choices is used, the city itself would be on the hook for payments if the revenues and profits were not there.

Bailey agreed that would be the case, but felt it would not be necessary.

Hall also said she thought memberships were steadily increasing and would continue to do so and usage at the center was also at an all time high.

“I think if we improve our facility it will be used even more,” she says. “Right now, during peak times each day, it is very crowded in our weight/exercise room. And our machines are too close to each other. We need more room.”

The discussion came during the council’s work session on Monday, so no action was taken.

However, Mayor Rick Scholtes promised the council would take it up at the May 6 meeting after they had a chance to study the proposal.

Bailey said the council would need to decide whether to approve the plan or not, then decide whether to employ an architect or not, then decide which funding plan to use.