No deal: VenuWorks withdraws contract proposal putting Sanford Center on track for new management
During a Bemidji City Council work session Monday, the Iowa-based company VenuWorks announced it was going to accept the termination of its contract and close its time as the Sanford Center's manager, rather than renegotiate a new agreement.
BEMIDJI -- VenuWorks' time as the Sanford Center's management company will conclude in March 2022.
Going into a work session, Monday afternoon, Sept. 20, the Bemidji City Council was expected to review a new contract proposal from the Iowa-based management firm. However, at the meeting's start, VenuWorks CEO Steve Peters announced the company was withdrawing its proposal.
VenuWorks has been managing Sanford Center from the start when the 193,000-square-foot event facility opened its doors in fall 2010. However, on Sept. 7, the council voted to terminate its existing contract with the firm .
The contract had been approved by the council in April 2018 and had been set to expire in December 2024. The council took action to end the agreement earlier this month, with several members citing feedback from citizens and overall dissatisfaction with the operating losses at the building.
In response to the council's vote, VenuWorks officials planned to renegotiate the contract with the city to remain the building's manager. As part of the renegotiation, VenuWorks had planned to present a proposal where the scope of services would remain the same and would also last through 2024.
The biggest change of the contract would be how VenuWorks is paid. The new proposal would eliminate the fixed management fee with the company, and instead, VenuWorks would be paid with an incentive fee, based on how it manages the Sanford Center's operating losses.
On an annual basis, the city invests hundreds of thousands of dollars to cover operating losses at the Sanford Center. In 2020, the amount was $450,000.
However, the incentive fee option based on the city's subsidy was taken off the table Monday.
"For us to proceed with that contract would require a spirit of cooperation between VenuWorks and the city. The trust that we will work together in good faith," Peters said. "In the past few days of considering our proposal, having seen the tone in letters and on social media, I don't know if we can get to that level of mutual trust."
Peters said VenuWorks will now work through March 6 and "will do our best to hand you an operation that's thriving."
After the announcement, the council found common ground on the idea of sending out a request for proposals for the Sanford Center's management and establishing a new committee to handle the transition process.
"I recognize that one of the reasons I was elected is that people want solutions to outstanding problems the city has had for quite some time," Mayor Jorge Prince said. "The financial issues at the Sanford Center have been all outstanding. I see this as an opportunity for our community to come together, to work through some of these challenges we've been talking about the last decade and move forward."