Vadnais Heights tackles 'sportsplex' financing

A proposed Vadnais Heights sports complex that would rely on user fees to pay off its debt emerges at a time when other metro ice arenas have struggled to find money.

The $26.5 million proposal includes two ice rinks, an adjoining domed track and field, and several new businesses on a 16-acre site at Hwy. 61 and County Road E.

While the overall project is envisioned as reviving a corner of the city that Mayor Susan Banovetz describes as "blighted," the "sportsplex" -- and the funding behind it -- has attracted the most public attention.

At a public hearing Monday night, the Vadnais Heights City Council will tackle whether revenue bonds -- bonds repaid with revenue the project generates -- should be issued to buy land and build the complex. Many boosters have declared their support with gusto, promising to use the sportsplex, while others question whether user fees would keep the complex afloat.

"I was skeptical in the beginning, but I believe the revenue will pay a vast majority of the cost," said Joe Murphy, a City Council member. "With these types of facilities, if you can break even it's considered a huge accomplishment. It has to be sustaining or pretty close every year so we don't have to use money from the general fund to cover the losses."

Another council member, Jerry Auge, said he was inclined to oppose the project. "I feel a little uneasy," he said, adding he doesn't know of any area ice arenas not hurting.

Gerry Urban, the city administrator, said the project should pay for itself without any city dollars. Rents and leases in the first year would bring about $2.2 million, he said. Another $200,000 would come from naming rights, advertising and concession royalties.

The economic downturn has hurt some ice arenas, said Dave Black, manager of the Bielenberg Sports Center in Woodbury. As more suburban cities build arenas or larger sports complexes, attendance declines elsewhere, he said.

That very scenario is unfolding in Waconia, where hockey boosters are struggling to meet their financial obligations to the city from a skating arena that opened two years ago. Eden Prairie and Victoria added ice sheets in recent years, siphoning business from Waconia.

"It did give me pause," said Murphy, who has watched how other cities fare. What makes the Vadnais Heights proposal different, he said, is that the development would have broad appeal and could become a regional attraction for sporting events.

The proposal is similar to one in Farmington, where a developer wants to replace aging Schmitz-Maki Arena with a sports complex that includes a hotel and restaurant. Farmington city leaders said they're wary of any financing arrangements that depend on public dollars.

One of the groups negotiating a contract for ice time is the White Bear Lake School District, which would spend about $42,000 a year to put varsity boys' and girls' hockey teams in Vadnais Heights.

One resident critical of the development is Terry Nyblom, a Vadnais Heights auto mechanic who unsuccessfully asked the City Council to pitch the proposed development to voters on the November ballot.

"The city's never going to let the citizens know the hidden cost of this project," Nyblom said. He likes the idea of a sports complex, but he thinks Vadnais Heights property taxpayers eventually will wind up paying for a place used by groups from other cities.

City would not be owner

A nonprofit group known as Community Facility Partners, not the city, would own the sports complex and pay the debt. As "master leaseholder," the city would have to pay any short-term bond shortfall out of a special fund.

The proposed 30-year revenue bonds would supplement $11.7 million in federal recovery bonds that Ramsey County gave the city.

The city is considering whether to double the size of the fieldhouse but without a major contribution from users, a third ice sheet isn't a priority, said City Administrator Clint Gridley.

"They don't have to pay the bills," he said. "In the end, we do."