City Council on Ice Rink
Attempt to Make Decision
August 3, 2009
Item 7A1 on the City Council Agenda for August 2, 2009.
video of meeting
About 3 1/2 hours of discussion.
Once it starts playing you
can go directly to the ice rink item by choosing "7.A.(1) PROPOSED ICE
RINK FACILITY" from the list underneath the picture.
Report explaining what the Council was being asked to decide
Note, all of the Attachments were prepared for the alternative
recommendation of go forward and build it now.
A, B, C
A - Terms of Proposed Management Agreement
B - 30 year pro forma with 4% revenue growth, 3% expense
C - 30 year pro forma with 3% revenue growth, 3% expense
Bond sizing based on Year 5 stabilized revenues
E - Reimbursement resolution - for city to reimburse itself
from bonds once they are issued
G, Part 1
G, Part 2
F - Responses to some previous questions by City Council
G - Draft management agreement between Polar Ice Ventures
official subset of letters to Council which is just those
sent to City Clerk by July 30
The City Council was asked to make a decision on whether
1. Spend up to 5 more months studying and negotiating a different
financial structure for the Ice Rink project to be located next to us,
(the City Manager's new recommendation)
2. Go forward and construct the new rink facility next to us
immediately (as previously recommended),
3. Give up on it (for now) and proceed to looking into renovating
the current rink at the Civic Center.
The new financial structure that would be studied and negotiated
would have the
grant a "ground lease" for the land to Polar Ice Ventures (PIV) under
which PIV would
take responsibility for building and running the facility. The
would issue a combination of $11.1 million in special tax-exempt and
$7.4 million of bonds with federally subsidized interest. These
are new types of "Recovery Zone" bonds authorized under the federal
stimulus bill. Those amounts are the total issuance amounts
allocated to the city. The responsiblity for paying
the bonds back would be passed through to Polar Ice Ventures instead of
remaining with the city. This would relieve the city of the risk
of revenues being
less then, or costs being higher then, expected. Instead Polar
Ventures would take on that risk in return for the reward of the
profits. The city would still take responsibility for the PCC and
Edison agreements and the
considerable upfront cost (as much as $1.5 million) for the access route from Foothill through
PCC's lot and Edison land and for getting the utility
connections to the site. Because the total value of those bonds does
not add up to the funding needed, staff would also approach the County
to see if it would be willing to cede some of its authority for issung
such bonds. Staff indicated an additional upfront cash investment
from the city to make up the difference. This financing proposal
sometimes referred to as either the "ground lease" option or the
"public/private partnership". The goal would be to complete negotiations on this proposal by the end of the year.
The alternative recommendation was what had been proposed at the July 13 Finance Committee meeting.
In that proposal the city would issue 30 year bonds and be
responsible for paying them back. Polar Ice Ventures would
rink under a 10 year management agreement. The favored financial
projection released July 13 and repeated in this Staff Report is that
over the first 10 years the city's
general fund would have to put in about $3.2 million to cover the
difference between revenues and expenses, but after that revenues would
exceed expenses, and by year 17 the city would supposedly make its
back (sans interest) and continue making money for the remainder of
the bond's life. However, the city would bear the entire risk of
higher then expected construction or operating costs and/or lower
revenues then projected. This is sometimes referred to as the
original recommendation or the management agreement option.
A major turning point of the Council's deliberation was the realization
(not stated in the staff report) that the recommended ground lease option would
likely cost considerably more upfront then the original
recommendation. The advantage would be the reduction of risk
to the city. An additional disadvantage (if you believe the project
will ultimately be profitable) would be that the city would not get
Council member McAustin was not present at the meeting.
members Madison and Haderlein strongly favored the original
recommendation for the city to build the facility now, issue bonds, and
operate the facility via management agreement.
Council member Madison suggested yet another redesign to save
construction cost. He said he thinks it is over designed, that
what it looks like on the outside does not matter, only the
inside. (Note however, the Council has never been presented the
current design.) Staff tried to explain why there is very little
likelihood of saving more because the soil conditions preclude the
normal least expensive construction methods (pre-fab tilt up),
reduction of energy efficiency raises long term costs, and every change
costs time and money to run the numbers to figure out the results.
Council members Holden, Gordo, and Robinson were not willing to commit
funds now given the difficult financial environment for the city.
member Tornek said he initially was pleased to see the recommendation
for shifting risk, but after learning of the costs could not support
it. He was the only Council member to state he was in favor of
the project down. Bad site, bad soil, industrial building in
residential area, awful access, great ongoing financial risk, does not
share optimism of ultimate benefit. He said he has made a living
evaluating long term pro formas. Thinks there is extraordinary
risk even under the best circumstances. Moving this to the head
of the list of unfunded capital improvements does not make sense.
He said he would like to maintain recreational skating in the city and
would support rehabbing the existing location.
member Holden suggested looking into a joint project with other
nearby cities, maybe another city had a good location. Other
members said they either didn't want to share what they believe will be
profit with another city (Madison & Haderlein) or they didn't
believe another city would want to commit funds to a project in
Pasadena (missing the notion of a different location). Councilman
Holden indicated he had initially thought he would support the ground
lease alternative, but after hearing Tornek's perspective he could
not. Then he said he would abstain from the compromise resolution
that was being put together, but after the others agreed to include
looking for collaboration from other communities, he agreed to support
Twenty-two people spoke at public comment.
majority, sixteen, were ice or hockey skaters or coaches in favor of
going forward immediately. Eleven of those were from outside the
- Existing facility is too small and skaters have to travel long distances to appropriate facilities
- Existing facility is dangerous
- Ice skating has been in Pasadena for very long time, they like Pasadena
will gain from visitors going to restaurants, stores, hotels once they
have a facility where they can have lots of tournaments.
- Although present, a representative of Polar Ice Ventures did not speak.
Six speakers urged not building the facility for a variety of reasons, among them
to obtain five votes for any of the options presented in the Staff
Report, the Council eventually voted 6 to 1 for a compromise
option. Essentially holding open and further investigating the
ground lease investigation option but not yet foreclosing the
possibility of the original management agreement proposal. The
thought seemed to be if they could just wring out the projected general
fund spending in the first 10 years, or at least reduce and delay it,
they might be able to get sufficient support for going ahead now with
the management agreement proposal.
- the inappropriate use of open space and loss for wildlife, trails, etc,
- the cost to the city at a time when employees and citizens are cutting back
- even an "efficient" ice rink is still an energy and water hog
- ice skating a sport for only a very small minority of population
- City staff to determine if contractor will continue bid to middle of September.
- If not, come back to City Council August 17 with whatever new
information have been able to get by then and ask for further
- If will, continue working the problem until first Council session of September.
- Work with contractor to flesh out possible ways to further reduce construction costs.
- Talk to County about possibility of using some of its stimulus pass through allocation.
- Talk more with PIV about the public/private partnership option.
- See if ice rink supporters can make more firm contribution commitments.
- Approach other cities for their openness to some kind of joint project.
Mayor's letter summarizing his take on the meeting result
Letters of comment/question to City Council members