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
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
which runs a number of rink facilities nationwide, including a
"Toyota Sports Center" facility in El Segundo where the Los Angeles
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.
- The company supposedly has a web site (but a
Google search finds only an address holding web site that says to "Come
A BizJournals article about Polar Ice Ventures, LLC says it is based in
Phoenix, AZ and is the largest owner/operator of Ice Skating facilities
in the U.S. (That article also states that the proposed agreement
with Pasadena as a done deal and that the new facility will open in
An Arizona Republic article from December 10, 2008 reports on the
merger of a Polar Ice management company with an American Skating
company which owns a number of rinks around the country and just bought
more. The result being a Polar Ice Ventures, LLC as a subsidiary
of an American Skating Entertainment Centers (ASEC).
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
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.
- Agenda Report which recommends Council actions and a summary of the project focusing on the financial aspects.
- Attachment A, key terms of the proposed management agreement
- Attachment B, the staff preferred pro forma table assuming 4% per year revenue growth with 3% growth of expenditures
- Attachment C, a pro forma table assuming 3% growth of revenue and 3% growth of expenditures
- Attachment D, a financial analysis page titled Year 5 Stablized Revenues - Bonding Capacity
- Attachment E, formal text of a Council resolution to declare "its
intention to reimburse itself from the proceeds of one or more
tax-exempt financings for certain expenditures made and/or to be made
in connection with the acquisition, construction, and equipping of
certain capital improvements." It says the maximum principle
amount of the bonds is to be $26 million.
- Attachment F, responses from the City Manager to questions apparently asked by the Council during closed session.
- Unlabeled attachment, the executive summary of a study done in 2001 on the cost of renovating the civic center ballroom.
- Unlabeled attachment showing prices charged for various activities at 6 different southern California ice rink facilities as of June 2009.
- Attachment G, a draft of the proposed management agreement with
Polar Ice Enterprises Pasadena, LLC, the subsidiary of Polar Ice
Ventures that would be formed just to operate the new facility.
Included are a few of the exhibits, such as the public benefit program
requirements, media and marketing plan examples, operational and
maintenance performance standards, a license agreement between the L.A.
Kings and Polar Ice Enterprises for sponsorship rights including an exhibit of what the Kings agree to provide to Polar Ice.
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.