Summary of Ice Rink Project Item
Meeting of City Council's Finance Committee
July 13, 2009

The Finance Committee of the City Council met in City Council Chambers starting at 4 pm.  The Ice Rink project discussion was second on the agenda and began about 4:30 pm.  It lasted until almost 6 pm.
Present initially were Finance committee members Holden, McAustin, and Haderlein.  Member Gordo arrived about 15 minutes into the Ice Rink discussion.

The meeting lasted until 6 pm.  Because of outstanding questions and issues, the Committee intended to discuss the subject again on July 27 at 4 pm with anticipation the item would be taken up by the full City Council at its regular 6:30 pm meeting on July 27.  However, on July 23 it was announced that the Finance Committee meeting on the 27th is cancelled and that there will instead be a joint meeting of the Finance Committee and the City Council on August 3.

The proposed construction contractor has extended its bid through August 16, giving the Council at little bit of time to ask questions and get answers.

Staff is recommending a combination of tax-exempt bond financing, similar to what was originally intended, with a subsidy to make up the difference between revenues and payments in the first 10 years.  They believe the municipal bond market has improved enough so that measures such as the internal borrowing scenario presented last December are not needed.

The recommended financing does require subsidy from the General Fund, with an estimated need of 10 years.  In the preferred pro forma the accumulated subsidy over those 10 years would be $3 million. The maxium yearly subsidy would be $735,000.  The project would break even after 17 years and go on to generate a net surplus to the city of $24.4 million over the 30 years.  If revenue is lower or expenditures higher the subsidy would be higher, the break even year further out, the net gain less (if any).

Staff acknowledged that doing this financing could hurt the city's bond rating, that the city's revenue is currently unstable, and not knowing what the state will do to balance its budget adds to the uncertainty. 

Staff said passed numbers by Disney Ice of Anaheim and were told they are within range.  Ice Skating Institute does research and a comparison was done with some of their numbers.  Asked operator to compare with current facility.  Admitted becomes more and more difficult to estimate as time gets further out.

The recommended manager of the facility is Polar Ice Ventures, LLC under a 10 year lease agreement.  Polar Ice Ventures is a corporation which runs a number of rink facilities nationwide,  including a "Toyota Sports Center" facility in El Segundo where the Los Angeles Kings practice. City staff has not contacted PCC since last summer.  They have been assuming the unwritten understanding regarding the proposed access route has not changed.  Verifying that understanding still holds is one of the actions staff is to take prior to the Finance Committee meeting on the 27th.

City staff believes it has worked out the site plan details with Edison, but did not have approval from Edison yet.  More worrisome, they did not yet have the price that Edison wants for leasing the area necessary for the access road.  Edison now reportedly wants to charge market rates.  Only a preliminary guess of the cost from a couple years ago is included in the pro forma numbers.  Getting the numbers from Edison and including them in the pro forma scenarios is another task for the staff prior to the meeting on the 27th.

If the Council were to choose not to go forward with the project, it could direct the staff to explore improvements to the existing facility or it could just let ice skating disappear at the expiration of the lease in 2011.  The Pasadena Civic Center Operating Company currently gets about $100,000 a year from the ice skating.  They do not have a current study as to what revenues they could expect to get from the 17,000 square feet used for other purposes, but expect it would be much more then that.  Although they always intended to rehabilitate the space, the last estimate (2001) to do that was $5 million and because of the reduced revenue from the current economic downturn they would not be able to afford to make that rehabilitation effort. 

For meeting on the 27th, staff was requested to include information about the Rose Bowl Aquatic Center model.

The printed materials made available to the public at the start of the meeting include:
The Staff's overhead presentation includes bullet points covered in the Staff Report but also has some financial charts including variations on the pro forma showing what would happen if revenue were 10% or 20% less then expected.  There is also a slightly different version of Attachment D of the Staff Report, using 32 years to maturity instead of 30.

A point of interest from the regular City Council meeting that evening was the presentation of the results of a Citizen Survey (item 7A1).  Although the staff presenter skipped over the ice rink related items and the Council members did not ask, they do not show a very high level of support for the project.
2009 Citizen Survey result subset including Ice Rink questions

Informal detailed minutes of this meeting.