Questions About the Park Board's M. O. U. With the Loppet Foundation

The following commentary by David Fehlan, resident of East Isles, was posted on the Minneapolis Issues List on January 16, 2013:


I read the complete MOU, the complete proposed agreement and everything that’s written above. Here are some questions/impressions:

1. Why 20+5 years? Was this negotiated? Was one party ready to walk away and this is the best, fairest compromise?

2. Why no escalation/inflation indexing clause in the so-called rent of $150K per year? That’s not going to be worth nearly as much in 20 years.

3. Why no escalation clause in the $10K the Foundation sets aside each year for maintenance/center improvements?

4. The $10K in No. 3 above sounds like a pittance. If homeowners are supposed to plan on 1% of property value per year in maintenance, why does the Foundation get away with a third of that amount?

5. Has a complete inventory and a fair market value been completed for the snow-making and skiing equipment that is going to be gifted to the Foundation? There is not a lot of detail in the Agreement and I could not find a clause that says the Foundation must return equal or greater equipment, in equal or better condition, to the MPRB at the end of the 20-year lease or at anytime should there be a breach or early termination.

6. The language is very clear that the Foundation’s total building contribution is capped at $3M and that they have pretty much free reign for fundraising for the next 20 years. That includes selling naming rights to the building and various rooms within. They’ve got some big-name sponsors on their website and I’m sure more would jump on board if the project moves ahead and more events are held throughout the year (more eyeballs for advertising). This could be a freakin’ goldmine for the foundation and the MPRB and its taxpayers would get squat.

7. Related to No. 6, the Foundation could make a lot of money on concessions, equipment sales and rentals, and ticket-taking at the golf course. Has the MRPB run through financial projections to see if they’re getting a fair deal? Is a 5% vig on golf-related transactions fair? That ranks up there with TicketMaster, no friend of the consumer.

8. I didn’t see any mention of a Service Level Agreement, meaning in return for all this taxpayer largesse, the Foundation must do X, Y and Z in addition to the Loppet and the summertime activities. If they are selling this as “it’s all about the kids” then why aren’t the community service performance indicators IN the agreement and adjusted each year or every other year? The Foundation could make a financial killing and in 20 years, still be offering ski training and outings to the same limited number of students they do today.

9. Steve Kotvis talks about all the volunteers, and I realize there are many. But this ain’t no labor of love for everyone involved. According to the 2010 IRS form 990 (where is the 2011 document), the executive director gets $50K a year, an admin asst gets $32K and there are a couple of other employees plus associated payroll taxes. Those figures aren’t extravagant now, but again, if the Foundation really grows, I would not be surprised to see a few six-figure jobs created.

10. Steve also says the upcoming Loppet will attract 100,000+ participants and spectators. I don’t know where that figure comes from, because on the Foundation’s website, one can see the highlights of the entire history of the Loppet and participants don’t appear to exceed ~750 and there are several thousand spectators, but not 10,000 and certainly not 100,000.

Overall, I think the MPRB and the taxpayers are getting screwed. The Foundation has little skin in the game and the upside is all theirs. This deal reminds me of the “privatized profits and socialized losses” phrase that came about to describe certain Wall Street banks.

David Fehlan

East Isles, Minneapolis