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2.02: Consider Support of Gap Assistance (Loan) and Assumption of Mortgage Agreement <br />for ARAA Sports Facility Project <br />Mayor Heineman introduced the topic of the GAP assistance loan and mortgage assumption for <br />the ARAA sports facility project. <br />Economic Development Manager Sullivan provided an update on the project, including the $13.43 <br />million cost and the City Council's prior support for a $2 million HRA loan. He discussed the <br />bank's financing proposal, which included revised terms and different funding ratios. <br />Mr. Dustin Reeder from ARAA presented the financial projections, highlighting the need for <br />$1.572 million in annual revenue to break even and the potential for significant profit at 60-70% <br />occupancy. He detailed the revenue sources, including rental revenue, naming rights, site -related <br />gambling, electric rebates, and potential solar panels. He also noted additional revenue potential <br />from concessions, batting cages, climbing walls, and internal sponsorships. <br />Mr. Reeder emphasized the need for rental revenue to cover current expenses and the potential for <br />significant profit if the facility were fully utilized. <br />Councilmember Stewart asked about the possibility of using the facility for community activities. <br />Mr. Reeder confirmed the facility could be used for senior programming and other community <br />events. <br />Councilmember Buscher reiterated the need for a community center and expressed support for the <br />project. <br />Councilmember Riley expressed concerns about the City assuming the risk and the potential <br />impact on taxpayers if the project failed. <br />The Council discussed the potential for community use during non -peak hours, including <br />suggestions for senior programming and indoor walking paths. <br />Economic Development Manager Sullivan presented the proposed financing structure, which <br />included a 70-30 loan -to -value ratio and the City's obligation to assume the mortgage in the event <br />of default. <br />The Council discussed the risks of assuming the mortgage, including the potential need for <br />alternative financing if the facility did not generate sufficient revenue. <br />Economic Development Manager Sullivan emphasized the importance of a clear assumption <br />agreement to protect the City's interests and ensure the facility's long-term viability. <br />The Council considered the City's potential ownership of the ARAA facility in the event of default, <br />and discussed the feasibility of selling or repurposing the building. After discussion, the Council <br />City Council Work Session / June 9, 2026 <br />Page 2 of 6 <br />