Community members see hospitality tax for Sanford Center as 'last resort'
During a Bemidji City Council work session Monday, a public hearing period was opened to learn what the community's opinion was on the concept of a hospitality tax. Such a tax would be used to support the Sanford Center.
BEMIDJI -- One of Bemidji's most well-known buildings was the site and subject of a Bemidji City Council meeting Monday evening.
For a work session, the council convened at the city-owned Sanford Center to hear the community's thoughts on the event facility. Specifically, elected officials were interested in hearing opinions on the best practices to fund the building.
Opened in 2010, the Sanford Center is a 193,000 square-foot event facility, managed by the Ames, Iowa-based company VenuWorks. Serving as the home of BSU men's and women's hockey programs, the building includes an arena with more than 4,000 seats and an attached conference space.
Since it opened, the Sanford Center has had annual losses of more than $300,000. In response, the city makes a yearly operating investment to cover budgeted losses. In 2020, the city's operating investment was $450,000.
The city relies on property taxes to cover the cost of the investment, as well as maintenance needs for the facility. According to city staff, Bemidji is unique in using primarily property taxes, as other communities utilize special use taxes, which can be applied on hotels or restaurants.
In years past, the city has supported the creation of a special use tax. Such a tax requires approval from the Minnesota Legislature. So far, though, proposals have not received legislative support.
At the start of Monday's listening session, with an audience of nearly 50 people, Bemidji Area Chamber of Commerce Director Abby Randall read a statement signed by leaders of various community organizations. The signees included:
- Gary Johnson, chair of the Bemidji Alliance.
- Caralee Nowak, Bemidji Area Chamber of Commerce president.
- Barb Smith, Greater Bemidji Economic Development president.
- Dr. Faith Hensrud, BSU president.
- Susan Jarvis, president and CEO of Sanford Health of Northern Minnesota.
The statement asks for an independent, third-party review of the Sanford Center's leadership, operations and management. The goal of the review is to identify if the building is being promoted, managed and operated "to ensure maximized economic impact and efficiency."
Since opening, the building has been managed by VenuWorks. In April 2018, the council approved a new contract with VenuWorks through 2024.
Should a review take place, the statement signers requested that the results from such an analysis would be used on creating a plan for operational improvements and the setting of performance standards. If those steps were met, the signers of the statement would "welcome a dialogue on a hospitality tax."
"We feel strongly that an assessment of the center's operations and development of a community-supported management, operations and leadership plan must be completed prior to any conversations around additional taxes," the statement read.
"We really need to look at the operation," said Ward 3 Councilmember Ron Johnson. "I've been asking staff for over seven years just to look at other options, or doing it in-house like Mankato and St. Cloud do. They don't even want to touch the subject. I think it's time."
Later in the meeting, former Councilmember Michael Meehlhause shared his support for a hospitality tax.
"It would shift the burden of supporting the event center from property tax payers in this community," Meehlhause said. "It would shift that burden to the users and visitors of this community. Anyone in this community who wants to see their property taxes lowered should support and demand a hospitality tax. Every other community with an event center has it, except Bemidji."
In his remarks, Bemidji Mayor Jorge Prince said he's heard community members say they want any tax to be a last resort.
"They want to know that the center is operating efficiently, even if it's not going to make a profit," Prince said. "Often, I'm asked if the center is operating efficiently. I can't tell you if it is or if it isn't, because I haven't done that study. That makes me uncomfortable when I talk about passing taxes of any sort when I don't know for certain that we are being as efficient as possible."
Prince also said he's heard varying opinions on what success for the facility is.
"I've heard success described as having events every night," Prince said. "I've heard people say it's a success if it breaks even or makes a profit. I've heard it's about access and non-profits being able to use it an having it available for community events. As a community, I'm not sure we've agreed universally on what success at our center means. If we haven't agreed on what the goal is, I'm not sure you can make a path to the goal."