MARYLAND HEIGHTS — The city of Maryland Heights is facing a deepening financial hole at its new public ice center after the coronavirus pandemic cratered ice rink sales, pushing the city to draw on reserves to make bond payments. Meanwhile, contractors have sued the center’s operator, alleging they are owed more than $6 million for unpaid work.
The city is on the hook for more than $55 million in bonds toward construction of the $83 million Centene Community Ice Center, where the St. Louis Blues practice. But revenues at the center have tanked in the past year, forcing the city to pony up when sales and taxes from the rink failed to cover bond payments.
And in June, Arco Construction Co. filed a lien on the 275,000-square-foot, four-rink center, then sued St. Louis Legacy Ice Foundation, the rink’s nonprofit operator. Subcontractors are still filing claims, according to St. Louis County Circuit Court documents.
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The lien stems from seven change orders that Arco alleges Legacy and the project developer, Clayton-based Summit Development Group, have not fully paid for.
Legacy Chairman Patrick Quinn said Arco and Legacy are negotiating payment.
Maryland Heights City Administrator Tracey Anderson and Mayor Mike Moeller did not respond to requests for comment.
Arco and Summit declined to comment on the suit.
Still, Blues President and CEO Chris Zimmerman, who sits on Legacy’s board, told the Post-Dispatch that the lawsuit will have no impact on operations at the ice center, “which since opening in 2019 has been a success on every measure.â€
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The St. Louis Blues first announced plans for a new practice facility in Maryland Heights in 2016 — a $35 million rink to be built next to Creve Coeur Lake Park, federally protected open space. Legacy formed that year to fundraise for the project.
But the proposal, which was backed by then-St. Louis County Executive Steve Stenger, faced immediate pushback from environmentalists and parkgoers. Legacy abandoned the site after the National Park Service blocked construction there.
A few weeks later, Legacy announced a new site, at 750 Casino Center Drive, 25 acres sandwiched between Hollywood Casino & Hotel and the Hollywood Casino Amphitheatre, 2 miles north of Creve Coeur park. The Blues is the facility’s most-high profile tenant, but Mercy sports medicine, Lindenwood University, St. Louis Blues Alumni Association, The St. Louis AAA Blues and The St. Louis Lady Cyclones also rent space.
Maryland Heights agreed to contribute $6.5 million upfront toward the facility — as well as issue $55.5 million in bonds. The Missouri Development Finance Board granted $2 million in tax credits to the project, and St. Louis County Port Authority committed $2 million.
Under terms of the financing agreement, Maryland Heights, which also was named in Arco’s lawsuit, would own the ice center and lease it to Legacy for 30 years. The city would contribute $100,000 toward debt payments in 2019, $150,000 in 2020, and $175,000 in 2021 and beyond.
The city counted on revenues from the ice center and the area’s special 1% sales tax from a Community Improvement District that also nets money from the casino, hotel and amphitheater to contribute to debt payments. Leases — $312,145 from the Blues; $359,982 from Mercy; $275,000 from Lindenwood; and $20,000 from the Blues alumni association — totaled almost $1 million in the first year alone.
A 2018 feasibility study projected the ice center would make $5.8 million in 2020 and $6.3 million in 2021 with more than one million annual visitors. The same study projected the CID would collect $481,685 in 2020 and $501,493 in 2021.
But then the COVID-19 pandemic arrived.
In 2020, the CID netted only $98,721.83 — including just 19 cents in July of that year — according to the CID’s annual report.
With less revenues from the ice center and CID to repay the bonds, Maryland Heights twice drew on reserve funds, $174,747 in 2020 and $1.16 million in 2021, to help make debt payments, according to financial disclosures.
The city replenished the reserve fund, required by a “backstop†clause in the financial agreement, and ponied up $38,333 in 2020 and $625,000 in 2021 from the city’s general fund.
The city paid another $6.2 million in 2020 to finish the facility, including its new music venue, St. Louis Music Park.
In total that year, the city paid $6.4 million to the ice center.
And the payments took a toll:
By the end of 2020, the city reported $25.2 million in its general fund, down from $30 million in 2016.
In March, S&P Global Ratings downgraded the city’s credit rating to BBB+ with a “negative outlook†— the second downgrade in four months.
“It further reflects our opinion of management’s involvement in an economic development ice arena project without thorough consideration of affordability in the event of unforeseen circumstances,†S&P Global Ratings credit analyst Coral Schoonejans said in the March report.
‘COVID-19 tried its darnedest’
The ice center opened on Sept. 7, 2019.
Arco alleges in its suit that the scope of the project was evolving since the start of construction in June 2018.
Alterations to the project’s design, bad weather and overtime all contributed to higher costs, it said. In March last year, the company began filing a series of change orders, including $238,816 for fireproofing and $30,636 for drywall revisions in the Blues’ space.
Legacy and Summit had pressured Arco to finish “on a nearly-impossible timeline,†Arco executives said in a letter sent last year to Summit, Legacy and the Blues.
“Arco flatly rejects the suggestion that, because Summit and Legacy ‘do not have any more money,’ Arco should ignore executed change orders, reduce our total contract value, and accept substantially less than we are owed,†the letter said.
Quinn, Legacy’s chairman, said he remains optimistic his nonprofit will reach a deal with Arco.
“We are hopeful that will be achieved shortly after the start of the upcoming hockey season,†Quinn said.
This season, Quinn added, over 99% of the facility’s prime-time ice has been booked. He said the ice center hosted the first-ever women’s professional hockey game in St. Louis, a USA Hockey Paralympic camp, and, to come in October, a blind hockey tournament.
Moreover, St. Louis Music Park is already exceeding Legacy’s projections, Quinn said, booking over 30 concerts and public events this summer.
“COVID-19 tried its darnedest to waylay the Centene Community Ice Center,†Quinn said. “But the tough youth and adult athletes of St Louis, along with the ice center’s staff, were not going to let this gem of a facility be held back.â€
