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CITY OF ELY

Data Center best use for Community Center?

Keith Vandervort
Posted 3/23/16

ELY – A reuse study for Ely’s Community Center reinforces the city’s plan to sell the vacant building to a group of investors interested in establishing a data collection center in the …

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CITY OF ELY

Data Center best use for Community Center?

Posted

ELY – A reuse study for Ely’s Community Center reinforces the city’s plan to sell the vacant building to a group of investors interested in establishing a data collection center in the landmark.

Mary Bujold of Maxfield Research and Consulting presented her assessment to City Council members this week of possible options she deems worth considering.

The city of Ely is about halfway through an exclusive one-year purchase-option agreement with an unnamed group of investors exploring the feasibility of renovating the building for a data collection facility.

Bujold’s draft report to the council included many options and scenarios on how the building could be used, and responses to questions.

The high cost of renovating the heating system, which she estimated at about $600,000, and the fact that the city-owned building would require the use of union-represented custodial and maintenance personnel, concluded a negative net operating income in various scenarios which involved the city keeping and maintaining the facility.

Bujold used a re-use study, completed just two years ago, as a starting point for her firm’s proposal. “I felt that some of the options presented in that document needed to be revisited and explored,” she said.

Several non-profit organizations, mostly from the Duluth area are looking for ways to attract businesses to Northeast Minnesota. “They started out by trying to identify strengths and resources that were available in the North Country and to promote those resources to companies to come here and develop products and services,” she said.

The use of bio fuels and biomass is currently undergoing quite a bit of research. “There are plenty of lumber resources up here to be able to develop potential products and process associated with biomass,” she said. “As it relates to your Community Center, as a research and development facility, it might have some options and benefits for the building.”

Bujold asserted that the potential for data centers are getting lots of attention, especially in Two Harbors and Duluth. There are lots of benefits to attracting this type of a business in the Northland area, according to Bujold, including: an ample supply of natural resources, lower utility costs, including free and ample cooling for data center equipment, and access to fiber optics and high-speed broadband.

“Fiber optic is a critical component to Ely,” she said.

Transportation and logistics, and the use of solar energy, were also listed as components that should be considered in attracting businesses to use the Community Center.

Innovative and light manufacturing has been considered as a re-use component for the Community Center. “Minnesota has a relatively robust manufacturing sector,” she said. “We are one of the few states in the nation that has managed to improve and keep our manufacturing sector. It delivers about 15 percent of the state’s gross product, which is actually quite high,” Bujold said.

“Food production is one area that is growing rapidly and in the Community Center’s original re-use study, there was an option for food production. I think there are some issues with that, including ventilation and other issues with the building, but there are companies out there looking for spaces such as this for food production. This whole idea of farm-to-table is really taking off, especially in Minnesota,” she said, “and small food processing is one area where your building could potentially be reused.”

She stressed that renovations and improvements to the building would need to be made. “One of the nice things is that there is already a kitchen facility in the building,” she added. “It needs improvements, but it is very expensive to put in a commercial kitchen from scratch, but there is some base there to work with.”

Bujold presented several more creative scenarios for ways to reuse the Community Center, including: textile manufacturing and a skilled industrial sewing process; film and movie production, which would involve renovating the auditorium into a sound stage; museum or historical facility; amusement, gambling, lodging, restaurant and lounge, and other leisure and hospitality facilities; office, meeting and conference spaces; and continuing education, art studio space and a recreation center.

All of the scenarios for potentially reusing the Community Center will be dictated by the cost to renovate the building. Bujold presented scenarios that differentiated between union and non-union custodial costs to realize a bare minimum of net operating revenue.

She only included the cost to upgrade the heating system in the building, which she estimated at $600,000. “That may be a little bit on the high side,” she admitted.

Council member Albert Forsman, who is the facilities director at Ely-Bloomenson Community Hospital, took issue with that estimate. “I personally feel that $600,000 estimate is grossly inflated, he said. “Looking at the size of the building, I’m confident a heating upgrade would be much less than that, even with an electrical upgrade.”

Council member Kara Polyner noted that no mention was made of the need to make the building compliant with the Americans With Disabilities Act and the need to install an elevator in the building, no matter who owns it.

Cecelia Domich, a member of the city’s Heritage Preservation Commission, said she was most interested in how the re-use of the building can make money, even if the city has to sell it. “We have a potential buyer out there, and everybody is very excited about that, but if that doesn’t materialize, I don’t think anybody wants to be in the position where we have to tear it down,” she said.

Mayor Chuck Novak said in looking at the numbers, “this council has no appetite to increase property taxes” to pay for a renovation. He asserted that the data center proposal is the “brightest thing on the horizon. The council is committed to that at this point. We are obligated to fulfill that purchase proposal.”

He said in addition to the heating system, the building’s electrical system needs up-grading as well. “There will be a lot of costs involved. It’s a gorilla to wrestle and I hope we’re strong enough to do it,” he said.

Bujold will submit a completed re-use study for the Community Center later this year and discuss her recommendations with the City Council.

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