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Financial study for Bemidji events center is released

The projected deficit has dropped.

That was the bottom line presented in a report to the Bemidji City Council from Wayzata-based Conventions, Sports & Leisure International, the firm hired to complete an updated financial report on the Bemidji events center.

In the report CSL reviewed three potential scenarios for the events center: Scenario One has the city operating both the events center/arena and convention center; Scenario Two has the city operating the arena and a private hotel operating the convention center; and Scenario Three has the city operating both a convention center and multipurpose hall, which would replace the hockey arena.

CSL has projected an annual net operating deficit of $297,000 for Scenario One, $236,000 for Scenario Two, and $222,000 for Scenario Three.

The projections listed represent the base case, or average, sub-scenarios; CSL also projected deficits for each of the three scenarios in low and high cases.

"The numbers are in the range that we anticipated," City Manager John Chattin said.

Chattin said the project team will continue to work toward a funding plan that does not rely on taxpayer dollars to cover any operating deficit.

"We have ideas, but we haven't finalized a plan yet," he said.

In October 2006 CSL released a feasibility study on the proposed events center which projected an annual deficit of $314,101.

Several aspects of the events center have changed since 2006. The location was moved from the railroad corridor to the south shore of Lake Bemidji, a proposed second sheet of ice for anchor tenant Bemidji State University hockey was removed; and the city is pursuing a potential partnership with a private developer for a hotel that also would be responsible for marketing and operating the convention center.

"A significantly greater opportunity for economic development and synergy exists at the new site," CSL wrote in the report. "It is believed that the new site/location has materially improved the marketability of the center, through the possible creation of an 'iconic' destination with attractive amenities, including lodging, retail, restaurants, recreation and leisure infrastructure."

In determining the operational deficits for each scenario, CSL considered the projected number and types of events, attendance of events, the estimated attendance at each event, and also the revenue the city would capture through its lease agreement with BSU.

While not factored into the operating deficits, CSL also discussed opportunities that could be utilized to lower the project deficits. The report said the city could sell naming rights for the facility and generate between $75,000 and $150,000 a year.

Other suggestions, such as the charging of parking fees or ticket surcharges of more than $1 were also discussed, but CSL warned that their implementation could also have a negative impact on the city's ability to attract events.

"The negatives (in terms of reduced patronage, perception by non-local event planners and/or community relations) could, after careful consideration, outweigh the benefits of such a course of action," the report says while discussing the possible assessment of parking fees.

Chattin noted that the city could also implement tax-increment financing to help spur the development along the south shore of Lake Bemidji.