City Joins Sonnentag Project
hurdles remain for plan to expand arena’s size
The Eau Claire City Council has voted unanimously to take part in a university-led project to build a major event center on Menomonie Street, but numerous steps are needed to make the partnership a reality by the time ground is broken this summer.
The City Council recently approved a letter of intent to create a “high-level, conceptional agreement” between the city, UW-Eau Claire, Visit Eau Claire, and Eau Claire Community Complex Inc. to build and operate what will be known as the Sonnentag Event and Recreation Complex. Specifically, the city intends to invest $6 million to $7 million in the complex to expand its seating capacity from 4,100 (the size UWEC decided would be adequate for its own use) to 5,100 (a size that supporters say will help the arena attract bigger events and national-level performers).
“Having a public institution working with another public institution to share a facility that benefits not only the university but the community, it’s just a win-win for everybody,” City Manager Dale Peters said. He compared the effort to the collaboration to build the Pablo Center at the Confluence, which opened in 2018.
Under the letter of intent, the city’s share of the project’s cost will be split 50-50 between funds from the city’s room tax, which is paid by hotel visitors, and funds generated by a new Tax Increment Finance district. In a TIF district, additional property taxes generated by new private development are used to pay off public infrastructure related to that project – in this case, the cost to boost the size of the arena.
Peters said the facility will have a positive economic benefit to the community by drawing tens of thousands of visitors for sports tournaments and major entertainment events. “It’s about bringing more people to Eau Claire, and it’s about increasing economic development opportunities, and it’s about supporting that Menomonie (Street) corridor as a sports corridor,” Peters said, noting the site’s proximity to Hobbs Ice Arena, Carson Park, the Menard YMCA Tennis Center, and other sports facilities.
The project was made possible by UWEC alumni John and Carolyn Sonnentag, who in 2014 announced they were donating about $10 million in money and property to the university-affiliated Blugold Real Estate Foundation. The 21-acre site on Menomonie Street was previously home to the family’s business, County Materials Corp.
Now that more than five years have passed since that announcement, Kimera Way, executive director of the Blugold Real Estate Foundation, said the university felt an obligation to the Sonnentags to move forward with the project. Last fall, UWEC Chancellor James Schmidt announced the university intends to break ground on the complex this summer. The university’s eagerness to turn the long-talked-about project into something tangible helped spur action on the part of the city.
“If we can engage with others to make it a better project and to serve a broader audience, we should always do that,” said Way, who also serves as president of Eau Claire Community Complex Inc., the nonprofit entity that will own the facility.
While UWEC concluded that a 4,100-seat facility would be large enough to meet its needs and replace 69-year-old Zorn Arena, Way acknowledged that having an even bigger space will allow the university to accommodate even more students and host bigger events. These events could indirectly benefit the university, she said: For example, large-scale youth sports tournaments attracted by the facility’s five basketball courts could bring potential future Blugolds to visit campus. (Under the terms of the letter of intent, the complex will host up to 15 athletic tournaments and 10 to 12 large-scale entertainment events each year.)
And while those involved in the project are optimistic, they also stress that numerous steps are still necessary for the project – and particularly the city’s involvement in it – to reach fruition. Here are some of them:
Finalizing A Development Agreement
The document approved by the City Council is merely a letter of intent, which must be followed by a more detailed (and binding) agreement among the city and the other parties outlining their contributions and responsibilities. The council must sign off on this document, too.
UW System Approval
UWEC Chancellor James Schmidt briefed UW System officials and the Board of Regents on the project last fall. The Board of Regents will have to OK the university’s lease of space in the shared complex.
A referendum of UWEC students likely will be held in April. Students must approve the use of their mandatory fees to go toward the project.
Coming Up With A Final Design
While several rounds of conceptual drawings have been created, final designs must be agreed to by the parties involved.
Creating A TIF District
The City Council must also approve the special tax district that will generate funds for its share of the project.
Finalizing Private Development
The city’s buy-in to the project depends on $25 million in private development within the TIF district, which will likely include two restaurants, a hotel, and Mayo Clinic Health System facilities. (If $25 million in private development isn’t created, Peters said, the developer then will be required to make a payment in lieu of taxes to fund the TIF.) Way said that Blugold Real Estate is currently negotiating with potential private developers, although there is no specific timeline for signing a development agreement.
Securing Other Funding Sources
Way said the Blugold Foundation is soliciting donations for the project to add to the Sonnentags’ philanthropic gift. Federal new market tax credits – which are designed to spur investment in low-income areas – will also be pursued to help pay for the project, Way said. However, the project will receive no state taxpayer revenue.
Mayo Clinic Health System is also part of the partnership to create the Sonnentag Complex, which will include clinical facilities where Mayo will offer “sports medicine, human performance enhancement, and imaging services.” Previously, the Chippewa Valley YMCA was also a partner, but it bowed out in December.
While the City of Eau Claire doesn’t intend to provide an ongoing operating subsidy for the complex, the letter of intent states that the city will pay up to 50% of the cost, or as much as $1.5 million, to ensure that the Sonnentag Complex is “energy independent, resilient to natural and/or manmade disaster, and reduce the emission of greenhouse gasses.” And the city also agreed to make certain infrastructure upgrades, including improving Menomonie Street so it can handle more traffic and enhancing an existing multipurpose trail that runs behind the Sonnentag site along the Chippewa River.
Way said a “tremendous amount of activity” will occur this spring to move the project forward. “I think you’ll see a lot of clarity and action occurring,” she said. “We’ll know a lot: the results of the referendum, we’ll probably have a draft of the agreement.”
At their Jan. 28 meeting, City Council members lauded the possibility of another university-community collaboration.
“I think it is just one more positive and productive step forward for this community,” City Council President Terry Weld said. “I’m excited for it and anxious to support it and look forward to partnering with all those that are involved.”