Wellness center costs may rise
The financial plan for the Choice Wellness Center was derailed on Thursday. If it doesn't get back on track, the result could be a smaller facility. Grand Forks Park District officials anticipated Thursday that they would wrap up the sale of bond...
The financial plan for the Choice Wellness Center was derailed on Thursday.
If it doesn't get back on track, the result could be a smaller facility.
Grand Forks Park District officials anticipated Thursday that they would wrap up the sale of bonds that would allow a $24 million project. However, by the time they met in late afternoon, the interest rate had climbed to 4.1 percent, meaning an extra $1.7 million cost to the project.
As the commissioners debated whether to lower the $24 million construction figure, word came via telephone that the rate had crept even higher, to 4.2 percent, meaning even higher costs. At that point, they decided to wait to see what Friday would bring.
Before agreeing to wait, there was a spirited debate between Park District Director John Staley and several commissioners. Jay Panzer and Tim Skarperud wanted to lower the project to $23 million while Molly Soeby suggested $23.5 million.
Panzer insisted that the commissioners should stick with their plan, which states that operation income -- mostly from memberships -- will pay 25 percent of the loan for the first 10 years and 40 percent for years 11-25.
"We would have had to increase it to 47 percent down the road," Panzer said. "I'm not comfortable with that. We're a public entity and we can't put that much pressure on a facility."
Staley, a consistent supporter of a wide-ranging wellness center, said there are other ways than cutting to make up the difference. He said construction project bids are consistently coming in lower than estimates. He said he has faith that memberships will be more than anticipated. And he said increased donations could cover the extra expense.
"We had another $186,000 in donations come in the other day," he said.
But Panzer urged caution. "Our goal was to build what we know we can afford," he said.
The rapidly rising interest rates surprised, frustrated and exasperated both sides of the debate.
"It's the most dramatic change I've ever seen," Staley said. "In mid-November, the rate was 3.2 percent."
The problem, Staley said, is a rush to complete the financing of projects that are receiving stimulus money before the end of the year. The concern is that the new Congress won't extend stimulus dollars, so everyone is trying to complete their deals, resulting in interest rates rising.
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