Frequently Asked Questions
Q. Why has the City Council proposed a sales tax referendum for parks and recreational improvements?
A. Elk River residents are proud of our parks and recreation system. The time has come to make investments to repair and upgrade our facilities to meet the expectations of our growing community and maintain our quality of life and local economy.
Q. When will the new sales tax take effect?
A. We will ask our local legislators to sponsor bills in the next session. Upon legislative approval and signed into law by the governor, the Minnesota Department of Revenue would be notified and local businesses would be informed to the law.
Q. what projects will begin first?
A. Many of the projects are in varying degrees of planning. Upon the completion of planning, they need to be prepared for bidding. Items on the State of Minnesota approved purchase lists may be realized first.
Q. where can i find out the status of the Active Elk River improvements once work begins?
A. We will have ongoing updates as projects are underway on this website, the City of Elk River Facebook and Twitter pages, and the city’s website. You can also sign up for electronic notifications through the city’s online alert system, Notify Me, where updates are sent to you via the method of your choice (text message or email) whenever new information about Active Elk River becomes available.
Q. What is in the plan?
A. The project work will cover recreational services and facilities that serve the entire community:
Multipurpose Recreational Facility offering a wide range of community services and amenities:
Two full-size ice rinks (with climate control for dry floor use)
Meeting and event space
30,000-square-foot field house
Café restaurant and retail shops
Designated space for senior activities and programming
Critical rehabilitation of Lake Orono that will improve water quality, expand wildlife habitat and reduce invasive species.
Connect and improve trails for pedestrians and bicyclists in and around neighborhoods, schools and parks.
Revitalize Orono Park with repairs and new amenities including an expanded beach, splash pad, skateboard park, lighted pickleball courts and modern restrooms.
Improvements at Lion John Weicht Park that include two lighted ball fields, modern restrooms, concessions and a 100-person picnic pavilion.
Upgrades at the city’s Youth Athletic Complex, featuring field lighting, modern restrooms, concessions and a new playground.
Q. How was the plan developed?
A. The city has studied ice arena improvements for over 10 years. The increasing repair costs at the Activity Center and Lions Park Center resulted in the city identifying the need for a reinvestment plan that met expectations of residents and was fair to local taxpayers. After receiving input at community meetings and reviewing options from the city staff, the Council voted to submit the Active Elk River plan for residents to consider.
Q. What will the plan cost?
A. The reinvestment plan for recreation and parks will cost $35 million. The City’s plan is to use low-interest bonds to pay for the improvements, and institute a one-half of one percent sales tax (half-cent) of local sales to finance the projects. The sales tax will pay bond payments to finance the city’s investments and will expire when the costs of the projects are paid, which is currently projected to occur in 25 years.
Q. How will this benefit the Elk River community?
A. Elk River is a thriving community that has emerged as a destination to live, work and raise a family. We are also a regional center drawing non-residents to use our many parks, play fields, and recreation facility. This investment will help the city maintain a vibrant quality of life. Much of Elk River’s lifestyle is built around parks and trails, as well as other outdoor and indoor activities that provide an abundance of options for everyone. Residents expect the same sort of amenities that other communities in the region enjoy, and the City needs to make the investments to keep these facilities safe and usable.
Q. Why are these improvements needed now?
A. The improvements have been planned for a long time. The Council have been concerned with the high costs and limited usage. Each of the city facilities in question are scheduled for expensive repairs/system replacement due to their age and wear. Each alone is expensive to operate due to extremely specific uses.
Completing the scheduled repairs/replacements will extend their operational life into the near future. We can also make changes that will better meet the expectations of our residents.
Q. Who pays this sales tax and how much will it affect me?
A. The sales tax allows Elk River residents to share a substantial portion of the costs with nonresidents. In fact, 45 percent of the tax will be paid by nonresidents, according to an analysis by the University of Minnesota.
The average cost per resident would be $44.12 a year, according to the University of Minnesota, or about $3.70 a month. The tax will only be paid on purchases that are currently subject to the sales tax – so most grocery items and clothing are exempt.
Q. Does the sales tax continue after the bonds are repaid?
A. Under current state law, the sales tax will expire once the bonds are repaid.
Q. Were residents involved in this plan?
A. To get more comprehensive feedback, City leaders and staff engaged residents in a variety of ways over the past four years about how to best invest in parks and recreational facilities. The City Council formed a Community Center Facility Task Force that met with residents and community organizations with an interest in recreation facilities and community space.
Meanwhile, the Parks and Recreation Department initiated surveys, community meetings and open houses to solicit input from residents for the long-term future of our parks and recreation system.
Q. Why hasn’t the city maintained our parks and recreation facilities?
A. The City has an annual budget for ongoing maintenance and has maintained these amenities in a fiscal responsible manner for over a decade until a broader plan could be developed and implemented. However, just like homes periodically need larger repairs (roof, furnace, major appliances, etc.) our facilities need similar large scale investments. That broader plan - Active Elk River - has now been developed and in addition to needs identified by city staff, community input was critical to deciding what was included. Many residents were clear that we’ve outgrown our amenities. In some cases, it makes more fiscal sense to replace or improve facilities instead of maintain them as-is so that they can continue to meet our long-term growth needs.
Q. This seems different – why a sales tax and why do we get to vote for it?
A. Minnesota laws allow for local option sales and use taxes to be raised by cities under certain conditions:
The Council holds a city-wide vote by referendum
Voters approve the sales tax; and
The state legislature passes a bill setting the conditions for collecting the tax.
Minnesota Department of Revenue data shows in 2015, Elk River had $388.7 million in taxable sales (excluding clothing, vehicles, services and food). A half-cent tax on the 2015 sales would be enough to pay the estimated annual bond payment.
Q. Could we use property taxes to repay the bonds?
A. Yes, but then the entire cost of the improvements would be paid by Elk River residents and business owners, even though our facilities are used by people who live throughout our region. With a sales tax, 45 percent of the cost will be paid by people who visit Elk River, according to research conducted by the University of Minnesota.
Q. Why bonds for these improvements?
A. Cities sell bonds to finance large projects such as police stations, fire stations, libraries, city halls and recreation facilities. Investors buy the bonds because they are safe investments with a guaranteed interest rate for a set period of time. Because the interest rate is often lower than the costs of construction inflation, the City can save money over time by making the investments now.
The benefit of financing with long-term bonds is that as we attract new residents who utilize the facilities, they also contribute to the payment for construction of the building. Quality of life projects for recreation also bring new residents to the city, which often provides workers for local business. Finally, current residents can enjoy the improvements more quickly than if we waited to make the improvements until after the sales tax is fully collected.
Q. What about finding other sources of funding such as sponsorships, naming rights and donations?
A. The City applied for Mighty Ducks Grants through the State of Minnesota to offset the 2016 referendum costs for the ice rink facility. Unfortunately, the 2017 legislature did not fund additional grants.
The City Council will continue to look for opportunities to partner with organizations that seek sponsorships and naming rights. Because the availability of these funds is unknown, we still need to set the sales tax at a level that will fully pay for the bonds. However, if additional sources of revenue are found, they can reduce the length of time that a sales tax will be needed.
Q. Is any other government sharing in these costs?
A. Not directly. The City and school district are collaborating on parking and storm water mitigation and the school district will pay negotiated rental/lease fees for space use.
Q. Why does the ice arena need to be upgraded?
A. The Barn Rink’s steel support frame was once coated with fire retardant insulation, and moisture has corroded the steel, requiring expensive mitigation work. Further, the size of the building and rink are not sufficient to meet needs for locker rooms, storage, training and spectator space.
The Olympic size rink was constructed with a used and now obsolete refrigeration system, and due to cost concerns was also not built with suitable locker room and storage space.
Q. Shouldn’t the Hockey Association come up with the money to pay for this facility?
A. The Elk River Youth Hockey Association constructed the original asset (The Barn Rink) and financially participated in the addition of the Olympic Rink and lobby costs. Users of the Ice Arena, including the youth hockey association and Elk River Figure Skating Club, rent the ice at a rate that covers all operational costs.
We appreciate the substantial contribution of the Hockey Association. No other youth or user group has contributed the same percentage of facility construction cost or operational cost for playfields or facilities. However, this is a City building, and the City needs to accept the responsibility for the long-term maintenance and improvements.
Q. Since the Arena is an Enterprise Fund is there an opportunity for it to support the City’s General Fund if there is an operating surplus?
A. The Ice Arena is a Special Revenue Fund. An Enterprise Fund operates like a private business where the total profits pay for all operational and capital costs (i.e. building construction, buildout). A Special Revenue Fund requires revenue from an external source to operate – in this case, it needs extra revenue to pay for the capital construction.
Historically, Ice Arena revenue exceeds operational (staffing, utilities) costs. But this revenue is not enough to make the bond payment. Instead, the revenue is used for equipment replacement and annual repairs as needed over time.
Q. Why construct a building that serves basically one sport?
A. As proposed, the new facility will have more seating, climate-controlled space, meeting rooms and a concession area to serve a variety of community needs and generate additional revenue.
The ice rink area can host concerts, car/boat/camper/craft shows, fundraising events, dry floor athletic events, etc. Also, the Olympic shell, which could be expansion space for a future third rink, will include artificial sports turf in the interim to provide year-round training opportunities for high school activities, community use and youth athletic turf uses such as softball, baseball, football, lacrosse and soccer.
Q. Will Youth Hockey have to pay a user fee to use the facility to help offset costs?
A. Yes, the cost of ice, office, and training space is expected to continue to fully account for daily operational costs. This is true for all facility users including the hockey association, figure skating club, high school, other athletic associations and other user groups. The City’s role is to make sure the building itself meets standards for safety and usability – the users pay for operations.
Q. Are tennis, volleyball and soccer students considered in this proposal?
A. The field house will be fitted with a synthetic turf that can be used for various activities. Recreation staff has discussed including a sport court that could overlay the turf to host a variety of court activities including tennis, volleyball, and pickleball.
Q. Does the proposal include swimming pools?
A. This plan does not include an indoor swimming pool. The council’s intention is to 1) improve and economize existing facilities, 2) meet growth needs in existing facilities, and 3) complete the master plan for Orono Park. The city has a contract with the local YMCA to offer Elk River residents four free family passes each year. The YMCA has confirmed that grandchildren are also included in the family pass offerings. To obtain these passes, you must present a valid I.D. for proof of residency.
Q. Did the City Council consider other options?
A. Yes, the Council looked at other ways to pay for the plan, including property taxes, and considered whether to invest in only part of the current plan. In the end, taking care of each of these priorities now, and using the sales tax to repay the bonds, was determined to be the best option to present to local voters.
Q. What would have happened if the referendum had failed?
A. On August 6, the City Council discussed what action would take place if the referendum for a Local Option Sales Tax for $35 million in recreation improvements fail. It was their unanimous consensus that they would sell $17 million in municipal bonds to be repaid by Elk River property taxes to fund the replacement of the Barn Rink, additional locker rooms and lobby space along with the upgrade of the Olympic Rink refrigeration system. They would also use $1 million of the total for the dredging of Lake Orono.
The Council did not commit to any other improvements, including the Activity Center, Lions Park Center, YAC and Orono Park or trail extensions.
Read more about the City Council’s “Plan B” here