Byline: NICOLE NORFLEET; STAFF WRITER
The push for a new ice arena and sports complex in West St. Paul is maintaining its momentum, despite a new study showing that it could lose hundreds of thousands of dollars annually, rather than pay for itself or make money as originally hoped.
The proposed ice arena and accompanying FieldTurf dome would lose as much as $445,000 in its first full year, depending on which options the city chooses, according to an April feasibility study. At that price tag, property taxes would rise by 4.9 percent, which is about $48 per year for the average homeowner.
City officials have already started whittling that number down and hope to continue to chip away at the gap in the coming months.
Still, any cost is a far cry from the developer's estimates, which showed that the city could make more than $100,000 in annual profits.
Despite the changing financial projections, council members didn't budge much from their positions last week when members of the City Council, acting as the Economic Development Authority, discussed the complex.
'Why aren't people moving here now? ... Maybe it's because they go and they do the comparison and they look at all of the other cities around and they say, 'Well, what's West St. Paul have to offer?'' said Council Member Tony Vitelli.
Despite the inevitable use of public money, Vitelli and several other members said the complex was a good investment in the city's future.
When Council Member Jim Englin started campaigning for the complex, he hoped it had the potential to pay for itself. But even with the better 'real world numbers' that the city has now, he said the complex has the potential to 'change the overall outside perception of West St. Paul.'
He also said that the gap between revenues and costs can continue to be closed. When a board subcommittee first reviewed the new report last month, the annual loss was pegged at $554,000, but after noticing that some of the costs were unnecessary, such as acquiring the nearby bowling alley for additional parking, they were able to be reduced.
However, the prospect of higher taxes still left a bad taste in the mouths of some council members.
'The way the financial situation and the economy is right now, I just don't think this is a good idea,' said Council Member Darlene Lewis.
In April, the city authorized financial advisor Ehlers and Associates to do a feasibility study and provide details about how to finance the complex. The recent report is a followup to study results presented earlier this year by developers looking at ways to replace the city's aging ice arena.
In earlier estimates presented by Oppidan Investment Co. and Conquest Development Services, the facility was projected to bring in about $1.6 million annually in revenues from ice rink and dome rental, retail leasing, concessions and advertising. That would mean about $102,000 in annual profits. But that study had the lease revenue bonds being paid off in 30 years instead of the 20 years that the new study examined.
Tweaks in the new plan could cut the annual loss projections; those include using a seasonal dome instead of a permanent one, saving about $1.6 million, which would close the gap to about $285,000. Changing the term of the bonds used from 20 years to 25 years could bring the gap down to $185,000.
The sports complex debate has been a divisive topic, with members drawing lines in the sand early out on how far they would be willing to go for the new city amenity.
But last week, council members voted 5-2 to continue the sports complex discussion. The council is expected to ask city staff to further review the numbers at Monday's city council meeting.
Nicole Norfleet - 612-673-4495
