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Pioneer Editorial: Finding the events center comfort level

The Bemidji Regional Events Center will lose money. The red ink from annual operational losses will amount to several thousands of dollars. But that's something everyone should have known going into the project, that public events centers never m...

The Bemidji Regional Events Center will lose money. The red ink from annual operational losses will amount to several thousands of dollars.

But that's something everyone should have known going into the project, that public events centers never make money. The heart of the matter, however, is how to maximize revenues while at the same time minimizing expenses.

The latest study of events center finances released last week by Convention, Sports & Leisure International estimates, on average, an annual operating loss of $497,000 if the city builds and operates an events center that includes a hockey arena and convention center. The loss improves to $436,000 a year if it involves the city-operated events center/hockey arena but leaves the convention center to a hotel partner. In a best-case scenario, operating losses could be $312,000 under the first option and $323,000 under the second.

The next question is determining the comfort level of Bemidji residents with that kind of operating loss. To some, any loss is intolerable.

But what must be considered, despite the on-paper loss in running a public facility, is what that kind of public asset it brings to the overall community economic development picture. Events center supporters cite that an events center at the Lake Bemidji southeast shore could generate an annual economic impact to the community in direct and indirect spending ranging from $7.5 million to $13.1 million. It also could provide long-term employment of between 126 to 219 full- and part-time jobs that will contribute between $3.3 million to $5.8 million a year in personal income.

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An argument could be easily made that any increase in city operations to the events center would be offset by the additional taxes created by the expanding economic base spurred by the events center. But CSL in its report also suggests other revenue-generating ideas such as an annual fee for center naming rights, ticket surcharge, parking fees, and most significantly, the participation of a hotel partner. Any capital contribution would improve the bottom line.

Is $400,000 to $500,000 a year in subsidized operations costs for an events center outside the comfort level? That's something the Bemidji City Council must determine, for it has the authority to proceed or stop. It's time for due diligence, a look at all the angles and beyond the public pressure of assuming that any loss goes directly to city property taxpayers.

As we've said before, we prefer finding a way to do the project rather than excuses not to do it. But if it simply can't be done, we need to know that, too. What's needed now is a good business plan that builds an events center and proves to the public it won't break the bank.

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