City may take over hockey arenas

This is the cold, hard truth - changes are coming to Cloquet's Northwoods Credit Union Arena and the neighboring Pine Valley hockey arena, no matter what.

The Cloquet ice hockey arenas are looking at a future that includes renovations to the tune of close to $3 million, City Administrator Aaron Reeves told the new Cloquet City Council at its first work session meeting Jan. 3. At the same meeting, he recommended the council consider taking over ownership of the arena from the Cloquet Area Hockey Association (CAHA), the youth hockey group that has "owned" and run the arena since it was built in 1996.

Although the city issued bonds to help pay for the building, CAHA has been using part of its annual revenues from hockey fees, renting to other teams, and tournaments to pay down those bonds. Other expensive repairs and the need to purchase a Zamboni required more bonding/borrowing, so the timeline to pay off the bonds has been delayed. Recently CAHA has been paying the city about $70,000 a year.

The plan was always for the hockey shelter - built on land owned by the city - to revert to the city of Cloquet anyway, Reeves said, once the bonds were paid off.

Reeves explained that the council basically has three options:

• Do nothing and let things continue to run as they have historically, with the hockey association coming to the city for help when it has major expenditures.

• Take over ownership and operation of the arena. That would require the city to staff and run the arena.

• Take over ownership of the arena, but have CAHA continue to manage and operate the rink, along with taking care of minor repairs, that the city would sign off on.

The previous council had directed Reeves to move forward with exploring the last option, which he and CAHA volunteers have been doing for months.

Director of Public Works Caleb Peterson said he supports that option as well.

"What you gain is control," Peterson said. "Historically CAHA came to the council at the last minute. From my chair, my biggest fear - with a $3 million bill staring them in the face - is they decide they can't make it work and the arena defaults to the city. And none of my staff know how to run the arena."

This way the current arena staff, from the rink manager to the maintenance staff and Zamboni drivers, remain employed by CAHA. The day-to-day wouldn't change much, except there would be greater oversight by the city. CAHA is one of very few youth associations in the state that still operate and maintain an ice facility.

Although there are numerous updates and renovations on the to-do list at the county's biggest and best hockey arena, the biggest item is the ice plant, which uses Freon R-22 refrigerant to make the floor cold enough to freeze water for an ice sheet.

As part of the Clean Air Act, the Environmental Protection Agency has been in the process of phasing out R-22 - which is harmful to the earth's ozone layer - so the chemical will no longer be produced or imported to the USA after 2020.

That doesn't mean existing supplies can't be bought and sold, however. Don Gentilini, president of the CAHA board, said the group has been stockpiling supplies of the refrigerant while it's still available.

So far, there is no simple switch available for Cloquet, which runs the R-22 directly under the ice. There is no way to simply change to another chemical. Changing to something like ammonia, for example, means changing the ice plant to a different system.

Consulting company SEH estimated the bill for changing the ice plant (to serve both rinks) - and the pipes that run under the surface of the rink floor to keep things cool - at between $1.9 million and $2.2 million. In 2014, consultants told the city that replacing the ice plants and/or floor pipes in both arenas could cost anywhere from $1.2 million to more than $3 million.

On top of replacing the ice plants, SEH recommended replacing the dasher boards for $300,000 at the same time. Other needed and costly renovations for the aging facility include replacing the dehumidification HVAC units ($180,000), two air handling units ($50,000), and either completely replacing and insulating the roof ($1 million) or just replacing the roof membrane ($600,000). Painting exterior precast walls would cost close to $75,000.

CAHA has done a great job, but no one expects them to come up with $3 million," Reeves said. "I want to make sure there is a long-term plan, for how, when and what we address, so we can plan and know we are doing the right things, and that things are being properly maintained."

The money likely will not come from the city's general fund, Reeves said; rather, he's betting that the state legislature and governor will approve changes to the Cloquet local sales tax legislation, to allow the city to take money set aside for the development of infrastructure for a commercial area at the junction of Interstate 35 and Highway 33, an initiative the city determined isn't going to happen because of lack of interest from big-box stores. Freeing up that money would allow the city to spend more sales tax dollars on parks and recreation - such as the arenas - as well as other city infrastructure needs such as water and sewer and street improvements. The city could bond for a portion of the needed funds as well.

Gentilini also pointed out that the arena would become eligible for state grants if it is city-owned. Although there is nothing to apply for now, there were some "Mighty Ducks" grants available from the state in the past to help with renovation costs, and there is some support in the legislature for a new round of grants as the R-22 deadline nears.

If the council decides to change the ownership agreement for the hockey arenas, Reeves said there will likely be little impact to this year's budget. In future years, however, CAHA wants to reduce its payments (basically for use of the arena) to the city from $70,000 in 2019 to $45,000 in 2020 and $25,000 in 2021.

The council is expected to formally discuss the city's arrangement with CAHA at its 7 p.m. council meeting Tuesday, Jan. 15, although that could change. The next week's council agenda is usually posted on the city's website (www.cloquetmn.gov) on Fridays.