Grants used to build ice arena restrict city's options to sell it now

It's not that the Falleti Ice Arena can't be sold, but restrictions from the grant money used to build it create one more barrier for the city to overcome before it can jettison the facility, according to a report released by the City Manager's office.

After some preliminary discussions with state and federal officials, it appears that if the city were to sell the ice rink, any proceeds would need to be used only on other parks and recreation facilities, or to benefit low- and moderate-income residents.

And how the money is used would also need to be approved by either the federal agency or the state agency that now administers Community Development Block Grants (CDBG).

The proceeds could not be used to pay down any current debt on the facility.

The city manager's report was released to city council members on Thursday and the findings will be discussed at Monday's council conference meeting.

The report notes that before these findings are confirmed, more talks need to take place with the federal Housing and Urban Development Department and the state's Office of Community Renewal.

The arena was originally built with CDBG funds in 1978, and it came with strings attached, including specifying what the city can do with the arena.

The existing debt on the rink is $400,000 and it is being paid by the current operator.

In 2006, the city received $1.2 million in low-interest loans from the state to improve energy efficiency at city facilities, including the ice arena. The operator will pay about $25,000 this year as reimbursement for the arena's share of those improvements.