MARSHALL - A nightmarish scenario is playing out before the eyes of Vadnais Heights residents as the Vadnais Sports Center, sold to the community as a key economic development piece for the city along Minnesota Highway 61, is facing major financial problems.
And on Monday, the Vadnais Heights City Council voted unanimously to sever ties with the troubled facility that has already reportedly cost taxpayers more than $1 million.
The obvious question that could spring to Marshall residents' mind as a result is: Could this happen here if a new regional amateur sports complex becomes a reality?
To that, Marshall Mayor Bob Byrnes said there are stark differences between the Vadnais Heights facility and the proposed $12.9 complex in Marshall, most notably the business and marketing plan that preceded them. He said in Marshall's case, that plan involves a well-supported effort that has been a work in progress since 2008.
"The business plan (in Marshall) addresses not only the users - the audience, the people that will be coming to the region - but also the costs of operating the facility," Byrnes said. "That will be addressed by the food and lodging tax, which would subsidize the operational costs. So that risk of if the projections vary or fall short, the operation costs are still covered."
The Vadnais Heights facility opened in 2010, and since then, revenues have fallen well short of projections.
That meant the city had to lend a reported $800,000-plus, on top of $625,000 that went toward the interest on three surrounding lots that were part of the arena deal. The center's problems also resulted in a blow to the city's bond rating, which was lowered from AA to A this year.
Byrnes said the Southwest Minnesota Amateur Sports Commission has put together a well-conceived plan to avoid such a fate, and much of that plan rests on the local sales tax vote coming in November. The proposed sports complex has twice failed in requests to the state for $4 million in bonding dollars. The state has approved $1 million for MERIT Center expansion.
A proposed .5 percent local sales tax to help cover capital construction costs for the projects received approval from the Minnesota Legislature in the 2011 session. A 1.5 percent "hospitality tax" on sales of prepared food, beverages and lodging to offset operating costs of the sports center was approved in 2010. The legislative approval has a two-year window, but Marshall got an extension on the 1.5 percent tax last year, so it could go on the ballot for the 2012 general election.
The proposed sports complex would have two sheets of ice that could be converted for other sporting events, as well as soccer and softball fields. The Schwan Food Co. has donated nearly 16 acres of land at the intersection of Minnesota Highways 23 and 19. Byrnes said the local tax options address both construction and operating costs.
"The Twin Cities facility addressed the construction costs but not the operating costs," Byrnes said. "With the Southwest Amateur Sports Commission plan, the cost of building it and the cost of operating it are all factored in. The local option sales tax is essential for both the MERIT Center and the amateur sports complex to go forward."
Byrnes said the financial troubles facing the Vadnais Heights facility reinforce the importance of the local work that has been done in terms of having a well-planned facility that addresses all of the costs "and doing that upfront rather than having things fall apart because the planning was not done properly. In (Marshall), years of planning have gone into this."
Another difference between the two facilities, Byrnes said, is that while Marshall has been tagged as a regional amateur sports center, Vadnais Heights had never gained that regional facility brand and is not affiliated with the state amateur sports commission.
Marshall City Administrator Ben Martig said the physical commonalities between the Vadnais Heights facility and the proposed Marshall facility are few and far between and that there is no comparison between financing packages. Although the city has contributed to the facility financially, the Vadnais Heights complex, Martig said, relies heavily on private revenue sources contributing a certain amount of money each year.
"That was sold on the idea that fees for service would generate enough to cover everything. It didn't happen that way," Martig said. "I think it lends itself to a disconnect between the city and the management group."
The joint financing piece in Marshall is, essentially, a community investment, Martig said, and it is funds raised from the local sales taxes that will ultimately mean the difference between success and failure. Martig also said having a new two-sheet ice facility would take $35,500 off the city's books. That's the amount of money that comes from the city's general fund to support the current ice facility in Marshall.
"That will go away if the vote passes because we won't be funding the old center. The sales tax would go to the new center, so I would argue that we would actually reduce the property tax burden, because there wouldn't be anything taken from the general fund," he said.
SMASC co-chairman Roger Madison added to the apples-to-oranges scenario from the competition perspective and noted the demographic differences between Vadnais Heights and Marshall.
"It's not just financing, it's a different competitive environment, said Madison. "We're looking at a facility that will be the best in a 50-, 60-, 70-mile radius. It's a different marketplace than what you have in the Twin Cities where there are so many arenas surrounding Vadnais Heights."
Martig said the new sports center itself likely won't be much of a job creator in terms of operations but doesn't see that as a negative. It's the potential for added commercial development that the city will most benefit from, he said.