Bemidji hopes new hockey rink loses less money than the one it already has

The 2009 groundbreaking of the Bemidji Regional Events Center (now the Sanford Center) was a celebratory affair. Paying for its operating deficits has been less fun.

The 2009 groundbreaking of the Bemidji Regional Events Center (now the Sanford Center) was a celebratory affair. Paying for its operating deficits has been less fun. Jeff Wheeler, Star Tribune

Bemidji’s Sanford Center is big, beautiful, and tens of millions of dollars over budget. 

The 185,000-square-foot events center opened in 2010 with forecasts of economic salvation, in a city where three in 10 residents live in poverty.

Originally called the Bemidji Regional Events Center, the arena was supposed to cost $35 million. In fact, Bemidji has funded the project with $73 million in sales tax and state bonds. Bells and whistles like a state-of-the-art weight room and a bigger, fancier scoreboard than initially budgeted added to the final price. 

Still, an economic study justified the big outlay for a small town, concluding as much as $13 million in new spending would pour into the local economy every year. 

The complex’s 4,500-seat arena already had anchor tenants in Bemidji State University’s men’s and women’s hockey teams. Capacity would swell to 6,000 spectators for sellout concerts. Additional revenues were predicted to flow from renting the building’s 10,000-square-foot ballroom and meeting spaces, big enough to accommodate any trade show or conference that came calling to the northwest Minnesota city (pop. 14,942).

“This will open thousands of doors for the city and region," Lori Paris, president of the Bemidji Area Chamber of Commerce, told a reporter in summer 2010. “Those are the kind of events that can add to the economic base of our community.”

There was, however, a word of caution from VenuWorks, the Iowa-based management firm hired to run the facility.

The city could expect to weather operating deficits for a few years until the center got off the ground. But VenuWorks Executive Director Bob LeBarron was quick to add he anticipated it to break even by its fifth year in business, if not sooner.

Now entering its seventh year, the Sanford Center requires about $400,000 annually from property taxes to cover its stubborn operating deficit.

According to City Council member Nancy Erickson, the facility’s debt payment, maintenance, and staff salaries eat up a total of 17 percent, or $900,000, of Bemidji’s property tax levy each year.

“What we used to use for police, parks, potholes, streets, etc., that has now been diverted to the Sanford Center,” says Erickson. “This, in a city, where we have a 29 percent poverty rate.”

But Sanford Health and Greater Bemidji Economic Development have a solution.

In a presentation to the city council earlier this week, the groups proposed building a new $27 million sports and wellness complex. The facility, which would be owned and operated by a private nonprofit group, includes an aquatics center and a two-sheet ice arena.

The creation of a 2 percent hospitality tax would bring in $1.25 million in yearly revenues to cover the operating costs and promotion of the new center, after which there would just enough left over -- $500,000 -- to go toward the already-built Sanford Center’s yearly losses.

As for paying for construction of the complex, Sanford Health has pledged a $10 million donation. Private donors would be responsible for $10 million more. The remaining $7.5 million will, more than likely, come from taxpayers. 

The partners look to a 2018 groundbreaking, with a grand opening penciled in for late 2019. That is, if they get the state Legislature’s blessing.

Hengel could not be reached for comment. However, before the council, he framed the project as an economic boon that would lead to almost 10,000 hotel stays and $2.4 million in uncorked consumer spending.

“The idea of sports tourism is a big deal,” Hengel said.

Mayor Rita Albrecht isn’t sold. 

“I’m somewhat concerned… if the city were to support visiting a hospitality tax to support, basically, a private nonprofit entity and their facility,” she says. “But here, like in all other places in northern Minnesota, ice is an important commodity, and we want to make sure our facilities are meeting those needs of our community.”

Albrecht points to two other Bemidji arenas currently serving youth hockey and figure skating that might justify investment in a new facility.

The 50-year-old city-owned Neilson Reise Arena needed $500,000 last year in overdue maintenance and repairs. But locker rooms remain outdated and the rink’s troublesome dehumidifier has meant an ice sheet routinely dotted by bumps.

Nymore Arena, which belongs to Bemidji Area Schools, is almost 45 years old. The district has been reluctant to invest in upgrades. It’s doubly so now, considering that its 2017-2018 budget required job cuts at four schools, including two layoffs at Bemidji High.

Council member Erickson declined comment about the recent proposal, saying, “We’re in such the early stages of learning about it, I cannot.”

Still, she wasn’t restrained in expressing her frustration about the issues surrounding Sanford Center.

During her unsuccessful bid for mayor in 2008, Erickson warned its construction “will eventually doom the city infrastructure and maintenance of the city.”

Today, she’s a conscripted supporter: “Now that the city has this building, it is my goal to make it successful. We have to be very careful we can maintain it into the future. We’ve got too much invested in that building.”

Erickson is well aware of the situation hanging over Bemidji’s smaller rinks. The longtime supporter of youth hockey and figure skating, Erickson, an accountant by trade, harbors reservations about committing more public money the city doesn't have to a high-priced arena.

“We have 100 percent of people living inside the city limits where 51 percent of the property isn’t taxable,” says Erickson, in reference to the colleges, hospitals, and government owned parcels within Bemidji’s 14 square miles. “So our 14,000 people are living on 49 percent of the taxable property.

“Yet on that 51 percent, we have to maintain and plough their streets. We have to keep their streetlights going. We have to provide law enforcement. The burden on the taxpayer is already heavy.”