The Vadnais Sports Center has two hockey rinks and three turf athletic fields under the state’s second-tallest dome, and it’s all on sale at the marked-down price of $13 million.
The beleaguered complex has been unable to meet revenue projections and pay its bills since it opened late in 2010. It went on the market in July at half the $26 million it took to build it.
A few suitors have expressed interest in buying the 220,000-square-foot parcel at 1490 E. County Road E, said Dan Nelson, general counsel for the arena’s owner, Community Facility Partners (CFP). Nelson said CFP has enlisted the services of Marcus and Millichap Real Estate Investment Brokerage Co. to market the property on behalf of bondholders. The Minneapolis firm recommended the $13 million asking price, Nelson said.
For bondholders, a sale at that price means they likely will take a loss.
“It is highly doubtful they will get their investment back, but until we have a winning bid, we don’t know how much they will get back,” Nelson said.
Nelson said he’s hopeful a sale can be completed by the end of the year.
Bondholders were notified of the sale in a letter sent last month by U.S. Bank, which is the trustee for the bondholders. The bank said it will hold a conference call Aug. 13 to update bondholders on the status of the facility, proposed sales process and related issues. A spokeswoman for the bank had no further comment.
The sale is just the latest chapter in the arena’s short three-year history.
Controversial from the start, the center, built with bonds backed by the city, was supposed to become a destination that spurred economic development along Hwy. 61 and the surrounding area in the northern Ramsey County community. Instead, the complex has generated mountains of red ink and headaches for the city of Vadnais Heights and investors.
Signs of trouble first surfaced in August 2011 when the city lent the arena $127,000 to cover a bond payment. Without that loan, the center would have defaulted on its debt and the city would have lost its lease with CFP. More loans followed, and the arena sunk into such a financial morass that city leaders last fall fired the arena’s management company, Sports Facility Development and Management Group, and its CEO, Mark Bigelbach. It then voted to stop covering shortfalls with taxpayer dollars as was required by the bonds.
In turn, that led to Standard & Poor’s to drop the city’s long-term rating on lease revenue bonds from an A- to a CC.
Before it was built, the Vadnais Sports Center was projected to have 1.3 million visitors and generate $2.3 million in revenue in its first full year, enough to pay the bills without tapping city money or needing a taxpayer bailout. In 2011, the center’s first full year, revenue was about $1.5 million, or $763,000 below projections, documents showed. And although business picked up in 2012 and the arena generated positive income during the first six months of 2013, there has not been enough revenue to cover the bond payments, Nelson said.
Nelson said there is plenty of interest in acquiring the property to keep an ice center.
“It’s not like the arena will go away and somebody will put up a shopping mall,” he said.