By Sara StrongThe city of Luverne and Rock County may not jointly own the Rock County Pool and Fitness Center after this year.The county terminated its pool joint powers agreement with the city in order to save money after the city backed out of the dispatch joint powers agreement. This year, the city contributed $160,220 to dispatch, which is operated by Rock County. And, the county contributed $62,265 to the Pool and Fitness Center, which is managed by the city.The city and county are now proposing details of how assets of the co-owned Pool and Fitness Center will be distributed.The county has said it will reinstate all agreements, but the city thinks it will save money by changing the status quo.The county’s answer to the proposal is that all contracts should be kept as they were.Dividing assetsThe city sent to the county two proposals for splitting assets of the Pool and Fitness Center.Option 1 funds depreciation, then splits the assets in half — which, according to the city, means Rock County owes the city of Luverne $250,000.The city came to this conclusion after considering that depreciation was never funded on the building or its contents.To divide the assets, the city would establish a "depreciated value of the improvements and equipment." The net value of the property, plant and equipment in financial statements is $600,970.Given additional depreciation the net value would be about $500,000. Under this concept, Rock County would be entitled to 50 percent of the net value of property, plant and equipment, or an estimated $250,000.However, the depreciation has never been funded, so there is no reserve for depreciation. The city calculated that depreciation at the end of this year is likely to approach $1 million.The city then calculated the difference between the Pool and Fitness Center’s value and unfunded depreciation, which would leave the county with a $250,000 bill, payable to the city.The county says it is strange that a facility, insured for $2.3 million on the city’s insurance policy, is considered to be worth a negative $500,000 when the city does the math with depreciation.County Attorney Don Klosterbuer said, "It would be more beneficial to focus on ways to continue our services at a cost saving to both parties, rather than to cost shift to one or the other."The second option the city suggested to the county was to solicit bids for the property and split the proceeds of the sale.The letter to the county says about Option 2: "Common sense indicates that there would be few, if any, bidders considering the following: 1) the depreciated value of the property, plant and equipment is an estimated $500,000 as of December 31, 2004; 2) the annual operating deficit (given the current rate structure) could approach $150,000 if property taxes and depreciation expenses are properly included and accounted for. Existing membership rates would need to at least double to offset such a projected deficit; 3) the population of Rock County (and, therefore, the potential increase in facility users) is not anticipated to increase dramatically; 4) annual repair expenses will likely increase given the age of the facility."
