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Crookston leaders search for ways to lower arena’s deficit

Jeremy Yeager hitches a ride from Casey Tiedeman during hockey practice for players in grades 5-8 at the Crookston Sports Center on Tuesday evening, April 22, 2014. Yeager is a volunteer coach for the group. GRAND FORKS HERALD/Eric Hylden

CROOKSTON, Minn. — Ice arenas typically are money losers because of their high utility costs and the reluctance to charge high fees for youth activities. The result is that arenas are highly subsidized by tax dollars.

The Crookston Sports Center is no exception. Before the three-sheet arena opened three years ago, the city was subsidizing its two arenas by about $400,000 a year. But this year’s subsidy for the CSC is projected to be $750,000, causing heads to turn on the City Council.

About one-fifth of that deficit will disappear after 2016, when the city makes its last $158,000 debt-service payment.

That still leaves another $200,000 to be found to reach the City Council’s unofficial goal of returning the arena’s annual deficit to about $400,000. Council and staff members are in the early stages of developing a plan.

Tom Jorgens is the City Council member who has been the most outspoken about the deficit. He said the city’s deficit-reducing strategy needs to be threefold:

  • Cutting expenses, possibly by limiting ice availability during warmer months.
  • Increasing the use of the arena to draw more revenue.
  • Private fundraising that would include the Blue Line Club as “a prime candidate.”

The Crookston Blue Line Club, the hockey boosters, rents ice from the city for 13 weeks, at $4,500 per week. But the club’s rent doesn’t cover all of the expenses of keeping the rink operating during that time.

Jorgens said the deficit could grow without taking measures.

“We have a fairly new facility that has relative low maintenance costs now,” he said. “We’re going to see maintenance costs increase as years go on. So, I think it’s wishful thinking that there will be a big savings when the ($158,000 payment) goes away.”

Less ice time?

The CSC has three ice sheets, one used for four months, one for six months and one for 10 months, going ice-free only in July and August. One key part of the discussion is whether to reduce the time of the 10-month rink because of the expense of maintaining ice when temperatures are higher. Also, the CSC has double the footprint of the previous two arenas combined.

Council member Dana Johnson said she’d be agreeable to a subsidy of $500,000 or less, but “we can’t subsidize hockey year-round. That’s not fair to the taxpayers if we do that. We have to look at whether spring ice and fall ice are affordable.”

Rich Sanders, a Blue Line Club board member, said the city should handle a bigger deficit than before because the facility “was basically a gift from the state.”

The state assistance was a result of the two existing arenas being removed because they were in a flood zone.

“Everyone paid very little for it,” Sanders said. “Everyone knew all along that it was going to cost more to run our (current) facility than it did before. Everyone sees us as having a lot of money and we don’t.”

However, Sanders says he’s confident that “by June, we’ll have it figured out.”

Subsidies elsewhere

If Crookston reaches its $400,000 goal, its subsidy would be in the ballpark of those in East Grand Forks and Thief River Falls, similar-sized Minnesota cities.

East Grand Forks’ subsidy for its three arenas is about $420,000, according to Dave Aker, the parks and recreation superintendent. In Thief River Falls, the 2013 subsidy was $366,000, about $50,000 more than in 2012. The increase was due to rising utility costs, said Joe Amundson, parks and recreation director.

Youth fees typically don’t cover the entire cost of activities. Warroad goes a step further. Its hockey players and figure skaters through ninth grade participate for free because two local nonprofits cover all costs.

The annual cost of running the hockey and figure skating programs is $300,000, said Keith Astrup, president of the Warroad Arena Board.

Economic boost?

City Administrator Shannon Stassen said citizens and council members need to consider that hockey tournaments and other events at the CSC provide an economic boost.

“In the last year and a half, we’d added $3 million in tax base that can be directly related to this arena,” he said, citing startups Drafts Bar and Grill and the Cobblestone Inn.

“The lodging tax has been on an incline the last three years since the arena opened and the activities at the arena have been a big part of that. I also can envision concerts, trade shows and other attractions of that nature at the sports center.”

Stassen said an arena is like a swimming pool: “It costs money to operate, but it makes the community better.”

Scott Riopelle, parks and recreation director, said more activities at the CSC will help the building’s bottom line and its value. He cites the popularity of the adult curling startup last winter as an example of adding uses and more revenue.

“We are using our artificial turf for track, golf, soccer, softball and intramurals,” he said. “The facility has also been used for auctions, dances, wedding receptions, birthday parties, company picnics and the Relay for Life walk.

“We’ve looked at concerts there, too, but they’re a very big risk.”