Hopefully, this isn’t “old news” – it took me a little while to find the time to write this up.
Councilor Barb Meuers said last week, during the council’s budget work session, that some councilors have repeatedly stated that the Bemidji Regional Event Center’s operations would not raise property taxes.
Her statements addressed the 2011 city budget , which include a $300,000 operating subsidy for the BREC.
â€œThis is why Iâ€™ve been voting no all along,â€ she said.
City Manager John Chattin and Mayor Richard Lehmann disagreed with Meuers, saying that they, all along, have said that the facility would lose money.
So, since then, I’ve done a little research – and this is what I found: (Note: All emphasis added by me, just today.)
– June 10, 2008, Bemidji Pioneer, “South Shore Redevelopment: Project scrapes by,” written by me. (This article detailed the 4-3 vote to approve the funding plan for the south shore redevelopment.)
‘While (City Manager John) Chattin said city staff have developed a plan that would be utilized without raising property taxes, Meuers said she could not put the residents’ property taxes on the line.”
-Â The June 9, 2009, minutes – the meeting from which the above article was written (just in case someone wants a source other than my reporting…):
“Chattin reviewed possible sources to cover operating deficits without raising property taxes which include: 1) sale of naming rights ($75,000 to $150,000 annually); 2) charge for parking during events; 3) increase ticket surcharges; 4) dedicate savings from the creation of an airport authority to the center; 5) dedicate a portion of the $150,000 savings from reorganization of the wastewater treatment facility; 6) reassess the need to continue city arena operations (Chattin noted that the City arena loses over $100,00 annually plus ongoing capital needs); 7) develop the old fairgrounds site, with the county and split lease revenues; 8) find additional opportunities for advertising revenues, i.e., scoreboard, sponsorships, etc.; 9) lease any unused office space; 10) increase the current hospitality tax to cover promotional costs included in the budget; and 11) pursue corporate pledges.”
– Jan. 11, 2008 Bemidji Pioneer, “Financial strategies planned to not affect taxpayers,” again, written by me:
“The event center project team, which consists of representatives from city staff, Headwaters Regional Development Commission and the design team, has developed funding strategies for the events center that do not rely on taxpayer dollars.”
– From the city’s Frequently Asked Questions about the BREC, which were released in September 2008.
First set of FAQs: Question: “I’m told the BREC will operated at a deficit. how will the city cover that cost?
“Convention, Sports, and Leisure, our consultants, suggest that an operating loss is inevitable for this facility. However, there are many possible revenue streams identified by CSL that could mitigate those losses. We should also consider the economic impact to our region generated by this facility and what that is worth. The city operates many facilities, none of which make a profit (except for our liquor stores). Parks, arenas, streets, and other facilities all have a cost associated with them. So will the BREC. It will be the cityâ€™s goal to operate the facility as efficiently as possible and minimize any loss. City staff have also identified other revenue sources and expenditure reductions that could help cover operational deficits. The goal is to prevent, or minimize, any increase in property taxes.“
Second set of FAQs:
Question: “How will the city pay for … deficits?
“Possible sources to cover operational deficits may include, but are not limited to, the following:
“Airport contribution – As the airport moves towards a stand alone taxing authority, the city could reallocate its $180,000 annual contribution to BREC operations.
“Arena â€“ The future of the City Arena should be examined. The Arena has annual operating deficits of $90,000, plus on-going capital requirements.
“Sell/Lease old fairgrounds property â€“ Jointly develop site with Beltrami County and split the sale or lease revenue.
“Sale of Naming Rights/Parking Fees/Ticket Surcharge/Budget Mandates â€“ These opportunities are described in detail in the CSL report and could generate from $80,000 to $303,000 annually.
“Property Taxes â€“ Should all other funding sources fail to cover operational deficits, the last resort, and least favorable remedy, remains property taxes. The extent of tax increases, if any, would depend on how revenue sources and operational projections materialize”
OK, back to present time.
I have a few thoughts.
The oft-referenced CSL study details anticipated deficits for the BREC. But one should note that the operational assistance needed is quite different when one considers the early start-up years versus later years (i.e. after year five), when the BREC is stabilized.
The CSL study, done in April 2008, shows an expected base stabilized deficit of $436,000.
As Councilor Ron Johnson noted lasted Monday, the city now is anticipating needing only about $300,000 for assistance in 2011, which is in line with the best-case scenario CSL presented.
Projections at this point are “conservative at best,” Johnson said, noting thatÂ budget figures do not include any revenue brought in from naming rights (which are still planned to be sold); include non-sold-out hockey games, (when many already have sold out); and there is a community fund available, totaling about $70,000, to assist with deficits.
Further, Johnson argued at the BREC would generate additional development, such as the two planned hotels in the area, that would help relieve any tax burden.