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Sanford Center deficits are dropping as they plan marketing surge; city mulls another try at hospitality tax

The Sanford Center is lit up Wednesday evening as people make their way into the building to watch the Harlem Globetrotters event last week. Center executives said they hope to further reduce their deficit to the city in 2014. MONTE DRAPER | BEMIDJI PIONEER1 / 2
Sanford Center2 / 2

BEMIDJI — After years of financial dark territory, the Sanford Center may finally be seeing a little sunshine.

The center recorded six-figure deficits each year since opening in 2010. The city of Bemidji covers the entirety of each deficit the Sanford Center posts, budgeting hundreds of thousands of dollars annually to make up for the losses as the facility works to get on its feet.

For at least two years, those deficits hovered at about $370,000, but the center is expected to have a brighter future this year. For all of 2014, the center is projected to approach the same deficit it had in 2010, when it was open for just three months.

Curtis Webb, the Sanford Center’s executive director, said it’s uncommon for events centers like Sanford to turn a profit at all.

“Buildings our size generally don’t make money,” he said.

City officials say the center was never intended to be a direct money-earner for Bemidji’s government coffers — rather the idea was to benefit the city’s economy as a whole by bringing in tourists.

“It was never, never to make a profit,” said City Manager John Chattin of the city’s motive in building the center.

Even so, the facility is still trying to slim the deficit.

“From my standpoint, we had a good year,” Webb said. “This year, moving into 2014...we decreased another $20,000-$25,000. Yeah, I think that’s good progress.”

Webb said further reducing the deficit is one of the center’s main goals in 2014.

“It’s key...for the community to see the building is working in a positive manner,” he said.


Webb said he plans to engage with the community for ways to shave the deficit further, but there are already concrete steps for 2014, he said. Chief among them is the plan to hire a marketing director in the next month, Webb said. The idea behind creating the marketing position is to take some of the heat off other, overworked executives and maximize productivity, he said.

“That’s our biggest first step,” Webb said. “Cyrus Pansch, who is our director of sales and marketing currently, has been doing sponsorship sales and marketing, and it’s really hard to do both. You’re wearing two hats.”

Pansch agreed.

“One of the things that’s true definitely for my position is, time is money,” he said. “Right now it’s tough. I feel like I’m butter, I’m spread so thin.”

Pansch doesn’t think hiring more staff to reduce a deficit is counterintuitive.

“You’ve got to spend money to make money,” Pansch said. “It’s my responsibility to sell more to make up for their salary. So ideally, we’re not… adding to a deficit, what we’re doing is, we’re adding potential sales ability.”

The new position’s salary hasn’t been decided but Webb said it would match the candidate’s skill set.

In addition, Webb said 2014 will see a sous chef come on board to assist the facility’s main chef during the busy season. He was also hopeful for possible cost-saving tips that would come out of an ongoing energy efficiency study being conducted on all city buildings by Honeywell-owned Energy Services Group.

“A 10 percent savings in utilities for us is $30,000, $40,000, $50,000, it’s huge money,” he said.

But Chattin said since the center’s utility systems already measured up to strict efficiency standards when it was built in 2010, any penny-pinching ideas from the study would likely be ways to fix the center’s energy-use practices, not the building itself.


Webb described the center’s relationship with the city as being at an “all-time high.”

“It should be very much a give-and-go relationship because we’re essentially dealing with city money, and we have to be good stewards of public money,” he said.

The majority of the calls Webb has been getting lately from Bemidji residents about the center have been positive, he said.

Chattin also said support has grown for the center, both at City Hall and on Main Street.

“BSU would probably not have a hockey program today if it weren’t for the construction of the Sanford Center,” Chattin said. “It has a much more far-reaching impact on our community than just having a concert there or somebody having a wedding there.”

Those Bemidjians with enmity toward the Sanford Center feel their property taxes are higher because of it, Chattin said.

“I think most of that opposition would be quelled if we had a hospitality tax,” Chattin said.

Hospitality tax try No. 2?

Last year, the city attempted to persuade the Minnesota Legislature to pass a bill allowing it to institute up to a 1 percent hospitality tax for purchases made at hotels and restaurants that was aimed at paying for the deficits. The rationale behind the bill was that it would shift the tax burden away from property taxes paid by Bemidji homeowners and businesses and toward sales taxes paid by people who visit the city.

The hospitality tax measure died when it was put before the Senate Tax Committee in the spring. Committee chair Sen. Rod Skoe, DFL-Clearbrook, explained at the time that the committee prefers requests like the hospitality tax be backed by that city’s chamber of commerce, but Bemidji’s chamber didn’t support the sales tax.

Chattin said the city may try again to get a similar bill passed in St. Paul — either as part of the next omnibus tax reform bill in 2015, or possibly even sooner in its own bill.

The Bemidji City Council, he said, supports the measure all the way.

“The last indication that I had from this council is that they’re 100 percent behind a hospitality tax,” he said.

Although Chattin declined to speculate whether he thought the city would get the chamber’s support this time around, he said the attempt to sway them wouldn’t be easy.

“Given the actions they took last year, I think it’s going to be difficult,” he said.

Lori Paris, president of the Bemidji Area Chamber of Commerce, said she and the board of directors would have to canvass the group’s membership of business owners before making a decision on whether to give approval to a hospitality tax. In 2013, membership was roughly split between members supporting the tax and those opposing it, she said, but if the pattern of better financial numbers coming out of the center continues, more members might be swayed in favor of the tax.

“I think it certainly has a lot more activity going on there,” she said of the center. “As those numbers keep growing...and with the property starting to sell on the south shore, some of those variables might make a change in the members’ minds.”

Zach Kayser
Zach Kayser covers local government and city issues for the Pioneer. He previously worked for the Wadena Pioneer Journal, and is an alumni of the University of Minnesota, Morris. 
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