Arena lease debate includes call for fairness

The Cloquet City Council and Cloquet School Board are in the midst of a virtual faceoff over a new lease for use of the city-owned hockey arenas. Earlier this month, the school board voted unanimously to only ratify one year of a three-year lease; on Tuesday night, the council voted against approving the lease at all.

Although school board chair Ted Lammi rallies annually against what he considers the gouging of the school district, this is the first time the school board has pushed back.

Of the three leaseholders, the school district pays by far the most for its use of Northwoods and Pine Valley ice arenas for the junior varsity and varsity practices, games and some gym classes.

The city is asking the school district to pay a total of $138,808 for 2022, a 3-percent increase over 2021, followed by a 3-percent increase each of the two following years.

The recently signed three-year agreement with the Minnesota Wilderness, on the other hand, requires the junior hockey team to pay $35,000 starting in June 2021, $36,000 the next year and $37,000 the year after that.

The Cloquet Area Hockey Association — the nonprofit organization which oversees Cloquet’s youth hockey programs — pays the city a flat $25,000 per year starting this year and “all years after,” according to the contract. However, the association is responsible for maintenance of the ice and equipment at the arenas, which includes hiring and covering the cost of staff.

CAHA also operates the concession stand at the arena. The Wilderness can sell alcoholic beverages at games, and some approved food items. The Wilderness also gets the money from all the advertising inside the arena. The contract with the school district doesn’t appear to include any revenue opportunities other than keeping the income from tickets, the same as the other leaseholders.

“We get the short end of the deal,” board member Hawk Huard said.

During its Aug. 9 meeting, superintendent Michael Cary told the school board that the city of Cloquet offered to continue discussions, but wanted the school district to agree to the terms now with an eye toward the next negotiations in three years.

“I sat on the (negotiating) committee with you and Nate and there was not much negotiating,” Huard said in response. “We went and they told us and then we left.”

That’s when board members elected to approve only one year of the three-year lease, to show good faith but also put pressure on the talks to result in a better deal for the district.

Cloquet city administrator Tim Peterson said he was surprised “and disappointed” by the school board vote, and recommended that the council not approve the one-year lease agreement from the school district. He said the other two leases are signed and the city is only asking leaseholders to cover the operating budget of the hockey arenas with the goal of breaking even on the arenas.

“We don’t want to go into a year expecting to lose money and have to levy (taxpayers, to make up the difference),” Peterson said, stressing that the city covers the cost of things like the $55,000 freon leak last year.

Peterson pointed out that the school district is larger than the city of Cloquet, and that Carlton and Esko schools also help pay the cost of the arena lease.

At-large councilor Lara Wilkinson asked if the city would ask for any help from leaseholders with the capital improvements the city hopes to make if voters approve a new half-percent sales tax in November 2022, including a new ice plant that will cost more than $2 million.

Peterson said no.

“It’s even more than that,” he said. “Quite a bit of work and effort goes into the planning, it’s not just financial. A lot of staff time is devoted to the arenas, to projects like the sales tax bill that we’re proposing.”

The council voted unanimously to reject the lease Tuesday. Peterson said “discussions would continue” and the vote should not come as a surprise to the superintendent. On Aug. 9, Lammi argued that balancing the books should not rest on the back of the school district.

“Maybe I’m wrong, but I think we’re kind of co-equal branches of government,” Lammi said. “But what we really are is, we’re the only sober members of an otherwise drunken family, because everyone else can just keep throwing things at us, and that’s what the city does. They know we’re going to take care of the kids.”

Board member Dave Battaglia supported the one-year lease. “I’d like to see some numbers to justify why we pay what we pay,” he said.

The puck is back in the school board’s end now, as they meet next on Friday morning for a work session followed by the regular meeting Monday, Aug. 23. The council will meet on Sept. 7.