A Maryland private equity firm has offered to purchase Amherst's Northtown Center ice rink complex for up to $8.5 million, but town officials aren't interested.
"This facility is worth far in excess of $8.5 million, and I think it's almost insulting," said Deputy Supervisor Steven D. Sanders.
Blackstreet Capital Holdings, in an April 2 letter to Supervisor Barry A. Weinstein, offered to purchase the four-rink complex for $1 million above the town's debt balance, which Blackstreet estimated at between $7 million and $7.5 million. By the end of 2016, Amherst was carrying $7.6 million in debt on Northtown Center, according to town figures.
"The more I looked at it, the more I realized how unreasonable this offer was," Sanders said.
According to the letter, Blackstreet in recent years has purchased several ice arenas, including Iceoplex at Southpointe in Canonsburg, Pa., Piney Ice in Odenton, Md., Ice World Maryland in Abingdon, Md., and Seven Bridges in Woodridge, Ill.
Blackstreet acquired the financially troubled Iceoplex at Southpointe in late January for $4.5 million, the Observer-Reporter of Washington, Pa., reported last month.
"BCH and its management team has extensive experience purchasing and owning ice arenas and hockey-related businesses," Jonathan Tipton, Blackstreet's senior vice president, wrote in the letter to Weinstein. "In each case, we've been able to offer the sellers certainty and the ability to close on a very quick timeline."
Phone calls to Blackstreet offices in Chevy Chase, Md., on Wednesday and Thursday were not returned.
Weinstein has raised the prospect of turning the town-owned ice rinks over to private operators, like the town has done with other public facilities such as golf courses and a composting facility during his seven-year tenure. But, he acknowledges, it won't happen this year – the final year of his last term.
Northtown Center's operating costs are covered by revenue, mainly from renting out ice time to hockey teams. But it runs a deficit of about $800,000 due to debt service payments from when the complex was built in 1998 off Maple Road near the University at Buffalo.
Figures for 2016 are not yet available, but in 2015 the center brought in $2.55 million in revenue and spent $2 million on operating expenses. But factor in the $1.35 million in debt payments, and there's the nearly $800,000 deficit Weinstein cites.
"We understand that the Arena is losing money and we are comfortable with our general understanding of the financial situation of the Arena," Tipton wrote.
Blackstreet's offer is valid through 7 p.m. on April 14. But selling a town-owned facility is not a simple process.
In a response to Tipton, Weinstein noted that to sell town-owned property a municipality must allow competition through a formal Request for Proposal process. He also called the suggested sale price "unrealistic."
A municipality would have to appraise the value of the real estate and would be barred from selling it for less, Weinstein said. The town would also possibly have to transfer the site's parkland designation to another parcel in the town with equal or greater recreation value – a process known as "alienation."
"Thank you for taking the time to write," Weinstein concluded. "We are not interested in your proposal."
So, what is the value of Northtown Center? The town, in a new preliminary assessment and full market value, put it at $8.9 million.
"Could that value be low? It could," said Town Assessor David Marrano. "Because, in my opinion, to truly determine the value you would have to do a thorough income approach to value."
Arriving at a more realistic number would require analyzing the center's revenues, expenses, profit and other economic factors, "which quite frankly on a town property we don't spend the money to do," said Marrano.
Sanders said Blackstreet's offer was the first he had seen for the center, and he considers it a bad deal. He likened it to an offer to buy a house as the mortgage is winding down by paying off the remaining debt and giving the owner $1,000.
"It's just crazy," said Sanders. "We're certainly always considering any reasonable offer, but I don't think this is reasonable."