In sports parlance, Ramsey County has reached the playoffs in its effort to buy the troubled Vadnais Sports Center, becoming one of three finalists to submit bids to purchase the 200,000-square-foot, white-domed athletic complex.
The county’s $10.55 million bid was the lowest among the final three contenders, but with one significant difference: it’s a cash-on-the-barrel, no-strings-attached offer.
The other two bidders would need to borrow money to help them make the purchase (and prove they are creditworthy). In addition, both of the other bids involve offers to bondholders who are holding the debt on the Sports Center to swap some of those IOUs in exchange for equity in their businesses.
That’s according to a notice that went out to bondholders this week from U.S. Bank, the trustee that is handling the Sports Center’s sale. Bondholders will hear more specifics about the proposals during a private conference call on Oct. 23. No decision will be made at that time; a final sale could be weeks away.
Bondholders now will decide on the next owner, said Dan Nelson, an attorney for Community Facility Partners. “The county obviously has a cash offer — that’s the bird in the hand,” he said. The other two bidders will have to prove they have the financing to back up their offers and it will be for the bondholders to judge, with the help of U.S. Bank.
The other contenders are Gem Lake Lodge, a North Oaks-based company affiliated with the White Bear Lake Hockey Association, a major user of the facility that offered $10.65 million, and Northern Educate, an Eagan-based company that leases space in the center, which offered $13 million.
For Northern Educate — which runs programs that blend athletic training with academics and leadership at three other sites in the Twin Cities and in Rochester, N.Y. — it would mark its first outright purchase of an athletic facility, said Brian Schoenborn, attorney for the company. More communities are moving away from local government involvement in running sports arenas in favor of private firms that specialize in those programs. “And that takes the burden off of taxpayers,” he said.
Ramsey County Commissioner Blake Huffman said cash-flow math determined the county’s bid. “Our bid was based on what we know in terms of revenues and operating expenses,” he said. “The user fees have to pay for those operational and capital costs.”
The competing bids pose a tough choice for bondholders, he added. “Do you want the cash now and be done? Or do you want to maintain some kind of involvement going forward?”
Most of the county’s 10 ice arenas (with 11 ice sheets) are aging, he said, and the center is a rare chance to buy a state-of-the-art sports complex at a bargain price. The county would get the cash from an internal loan from capital improvement funds designated for replacing and maintaining the arenas.
The Sports Center was put on the market in July with an asking price of $13 million, about half its original cost of construction. The city of Vadnais Heights financed it with bonds and turned over ownership to Community Facility Partners, a Deephaven nonprofit, under a lease arrangement. Projected revenues never covered expenses, and after subsidizing losses and other problems, the city defaulted on the bonds and walked away from the center late last year.