For more than a decade, Rosemount city leaders have wanted to bring more indoor recreation to the growing south-metro town. Gym space is at a premium and a public indoor pool is a missing amenity.
Market studies were conducted, plans were drawn up and residents were voiced. Rosemount was considering building a recreation center of its own. They looked at partnering with the YMCA, which other cities have done.
Hope Fieldhouse, a non-profit recreation center, opened in late 2020 and helped address Rosemount’s lack of indoor sports space. However, the 45,000-square-foot center serves youth, collegiate and high school basketball teams. And it doesn’t have a pool.
City officials now believe they have an answer: a partnership with Life Time for a roughly 107,000-square-foot recreation center that the city will own and the Chanhassen-based fitness chain will lease and operate.
Councilors took two big steps this month to make that happen. They signed a letter of intent with Life Time that included paying more than half of the roughly $48 million construction cost and the city picking up the rest. The council also signed off on the city’s purchase agreement for the purchase of a 29-acre park where the center will be built over 12 acres.
The rest of the land will be sold to Nordland Partners, a local commercial developer that plans to develop a grocery store, retail, restaurants, medical office space and multifamily housing, City Administrator Logan Martin said.
The partnership with Life Time, forged through discussions over the past three years, is nearly complete, Martin said. Next up will be for Life Time’s board to sign the lease with the city, a step Martin expects to take next month.
A public-private partnership makes the most sense for the city, Martin said. This will result in a larger recreation center with more amenities than the city could build on its own. And the city wouldn’t be on the hook for ongoing building repairs that would be covered by Life Time.
Mayor Bill Droste said Life Time also has know-how in running athletic clubs.
“This partnership would be a visionary and flexible way to achieve multiple goals for our residents while allowing the private sector to do what it does best,” he said.
If all goes according to plan, construction of the recreation center will begin next year and will be operational in 2024.
Martin said under the plan, the city would buy the land at the northeast corner of County Road 42 and Akron Avenue for $135,000 an acre, which is fair market value. To fund the project, the city will use revenue it receives when it pays commercial and industrial waste haulers to drop off at the SKB Environmental landfill.
Landfill money, along with fees from developers, helped Rosemount build many of its parks over the years, Martin said.
“This has been a very important source of income for us for many years,” he said. “And we’re now at a point in the city’s growth trajectory where the city council has decided that we can take some of those fees and put them toward a much-needed amenity in the form of a recreation center.”
Rosemount will issue general obligation bonds to finance its acquisition, development and construction. Life Time will sign a 30-year lease, furnish the facility and pay rent equal to its portion of the contract. It will cover all utilities and taxes estimated at $250,000 per year.
After the initial lease, the city will begin collecting about $600,000 in annual revenue from Life Time’s lease payments, Martin said.
At the same time, residents will receive a number of advantages. Life Time would offer them discounted monthly rates and four free guest passes each year for the first five years. Life Time will also establish a scholarship fund for families in need.
As Rosemount has grown, so has the need for indoor and outdoor sports space, city officials and youth sports groups say. The city’s population of 26,000 is nearly double what it was two decades ago and is expected to grow to at least 38,000 by 2040.
So the city has been exploring options to bring a recreation center to the community since 2011, when a partnership with the YMCA and Dakota County Technical College went through a feasibility study and concept plan.
Seven years later, he hired a consultant to study the city’s market and the feasibility of building and operating his own recreation center. While the study showed Rosemount’s growing need for more recreational facilities, it also concluded the city would lose more than half a million annually.
Rosemount revisited its YMCA partnership in 2019. In Maplewood, the city partnered with the YMCA to cover the operating costs of the community center. In White Bear Lake, the city began rebuilding the YMCA in exchange for membership discounts for residents. Such cities YMCAs offer a range of programs beyond the typical gym.
In Rosemount, city officials had set a total project budget of $21 million to support the partnership with the YMCA and planned to use landfill removal fees as a source of funding to build a 60,000-square-foot facility. However, because of how the YMCA structured its deals, Martin said, the city could have been responsible for half of the maintenance and upkeep of all buildings, as well as any lost profits that might have occurred in down years. In addition, the nonprofit would also be exempt from paying annual property taxes.
Around that time, Life Time approached the city as a possible partner. Aaron Kohler, the company’s vice president of real estate and development, said this month that they are evaluating Rosemount as a potential future project, but are holding off until the city’s population grows. That thinking has changed with a city partnership, he said.
“The win for us is that this contract accelerates our ability to be here and do this work,” Kohler said. “Being able to come to this agreement and do this work brings us here at a time that’s ahead of the curve for us, but perhaps behind the curve from a community perspective, because the demand and the desire is already there.”
NOT AN UNSEEN PARTNERSHIP
Life Time has approximately 160 locations nationwide, including Apple Valley, Eagan and Lakeville. Although rare, Life Time’s partnership with Rosemount would not be unprecedented for the company, which has partnered with the cities of Plymouth, Savage and Champlin on various levels of projects, according to a company spokesperson.
Rosemount currently has Snap Fitness, Anytime Fitness and several smaller private health clubs. Martin said he hasn’t heard from any of those operators about the city’s proposed partnership with Life Time.
Dan Corley, who founded Hope Fieldhouse, said he doesn’t view Life Time as competition. Hope Fieldhouse, which has about 3,400 members, offers four full-size basketball courts, a 3,000-square-foot fitness area and a walking track, but no pool.
“We’re a different model than Life Time,” said Corley, who serves on Hope’s board. “There will be some people who will test it, I’m sure. “I just really like the model where we focus on children and society.”
Corley, who grew up in Rosemount, said he thinks there will be more recreational facilities after Hope Fieldhouse. “And I think any of these opportunities are great for the community,” he said.